2. National Perspective and Update from Australian Local Government Association
Mayor David O’Loughlin, President
Australian Local Government Association
19 October 2017
Thank you for the opportunity to speak.
Association Annual Conferences are important opportunities to provide an update to councils on the priorities of ALGA, developments at the Federal level, and most importantly to listen. I also want to challenge you and to understand your issues and most importantly to provide the case studies and stories that make our national advocacy practical and real. This is very important, and I will revisit this toward the end of this talk.
Who are we? ALGA is a small focused organisation and our job is to maintain and strengthen the relationship local government has with the Australian Government. It’s a critical relationship for local government because from a financial perspective local government receives up to 10% of its annual funding from the Commonwealth through grants programs (in the year just gone the figure will be in excess of $3.8b out of operational expenditure of just over $34b).
It is also important because the Australian Government influences so many of the developments which occur in Australia and we need to make sure they get a local government perspective on their initiatives and factor us into, not out of, the future.

3. Australian Local Government Association
Federation of state and territory local government associations
Established 1947
The Municipal Association of Victoria is a member
Cr Mary Lalios and Cr David Clark are ALGA Board members
Small secretariat based in Canberra
ALGA has been in existence since 1947 but it remains a very lean and focused body. The ALGA Board includes 2 Directors from each State and Territories as well as an independent President.
The Secretariat has just 11 staff in total. So it is very lean – and for those of you who attended the recent National General Assembly you would probably expect that there are many more.
I want to take the opportunity to thank both Mary Lalios and David Clark for their contributions to the ALGA Board.

4. Role of ALGA President Independent Chair COAG and Ministerial Councils
Advocacy to Parliamentarians
Lead campaigns
Federal Budget submission and Federal Election Platform
Future Priorities
The ALGA President role is a leadership role. As President I chair the meetings of the ALGA Board, represent ALGA at COAG and ministerial council meetings and I am the primary advocate for ALGA with Federal Parliamentarians and key stakeholder groups. I am also of course the key media contact on the national agenda for local government.
As President my priorities include:
Ensuring that every state and territory association has an equal say at the Board table, and that ALGA policies truly reflect the priorities of associations and councils;
Local government’s voice is heard at COAG and COAG Councils to ensure that local government issues are not ignored and that local government’s roles are not weakened when national reforms are being developed; and
Leading ALGA campaigns – for example, it was my prividge to lead our successful campaign for the restoration of the indexation of the Financial Assistance Grants; and
Devising successful political strategies to advance ALGA priorities.
I have also placed a great emphasis on the need to be frequently present in Canberra and talking to Parliamentarians in person.

5. Recent ALGA Successes (since 2013)
Bridges Renewal Program
Extra R2R Funding
Restoration of FAGs Indexation
Total National Benefits to 2020/21 - $2,401m
Total Victorian Benefits (est) - $470m
Let us turn briefly to some recent ALGA successes.
I will restrict myself to three programs
The Bridges program which ALGA called for in advance of the 2013 election and which is worth $471m
The additional R2R funding of $1,105m which was provided to local government by agreement between the Government and Opposition in response to our campaign on the impact of the freeze on FAGs indexation.
The restoration of FAGs indexation in this year’s Budget which follows ALGA’s campaign and which the Federal Minister estimates is worth $836.5 million to local government by 2020/21.
The total national benefits for local government are $2041m and the benefits to Victorian councils are $470m.

6. ALGA Priorities Productivity, Innovation and Equity
Ministers and Shadow Ministers relationships
Contemporary issues: funding, regional development and digital transformation
Let me outline ALGA’s current priorities which were reflected in our Budget Submission provided to the Government at the beginning of 2017.
ALGA is currently reviewing these priorities to take account of the national political environment as well as having an eye to the next Federal election which many are now suggesting may be held in the second half of However, I expect that most of our priorities will remain unchanged.
The focus of our Budget Submission was the need for further Investment in Tomorrow’s Communities. More specifically, it had a major emphasis on improving productivity, fostering innovation and promoting equity.
As such, a key priority is the maintenance and development of ALGA’s strong relationships with and shadow ministers in key portfolios and other key decision-makers.
We also argued for and highlighted the critical importance of investment in local communities through increased FAGs and funding for important community infrastructure that helps make our communities – every community not just a few - the places that people want to live and work in. Places where we can retain our youth, key workers and attract new residents to our areas. In short – equity.

7. Key Advocacy Priorities
Financial Assistance Grants (indexation and quantum)
freight strategy
Local roads funding
Community infrastructure
Social and human services
There are a number of initiatives we proposed and will continue to advocate for with the Government. They build on the issue we raised in the 2016 Federal election campaign.
They can be usefully grouped into the five major issues you see there on the screen. We have an obvious focus on the Financial Assistance Grants for local government because they are such an important part of our funding, but we also have a strong focus on infrastructure and investment in productive infrastructure.
In 2016 our election document called for initiatives totalling around $4.05 billion over three years. Our economic modelling showed that for every dollar invested the national economy would grow by $2. More importantly, it would create an additional 19,300 jobs.

8. Financial Assistance Grants
Key revenue source
$2.3b per annum
Indexed annually
Indexation frozen for three years but now restored
Objective of 1% of Commonwealth tax revenue
An increase to an estimated $3.8 billion per annum
FAGs are vital to local government and to individual councils.
The decision to freeze the annual indexation for 3 years estimated by the Government to save $925m across the Budget outyears. This was an appalling decision by the Government and the threat of an extension to the freeze beyond 3 years was very real but with your help indexation was restored in the 2017 – 18 Federal Budget.
Funds invested in local communities through the FAGs make a major contribution to local economies and to the maintenance of local communities, especially in regional areas. We need to say thank you more often to our Federal MPs and Senators and we need to give them more credit for the FAGs and what we spend it on. This helps to reinforce in their minds the value of FAGs and makes it more likely they will defend the program.
FAGs as a percentage of Commonwealth taxation has, however, been constantly falling.
A reversal of the trend of the declining relative importance of FAGs by gradually restoring it to 1% of Commonwealth Taxation Revenue would make a real difference to all councils. A return to 1996 levels would see FAGs increased by $1.5b in today’s terms. If that was done gradually over 15 years to avoid a major fiscal imposition, there would be substantial benefits. ALGA will continue to argue this case.
The estimated benefits of incrementally increase FAGs to 1% of Commonwealth tax revenue would create 7,900 jobs and increase GDP by $2.81b over the first three years.

9. FAGs as % of Total Commonwealth Taxation Revenue

10. Freight Strategy for Local Roads
Local government roads 640,000 km by length
$140b in written down value
Need to carry freight on larger vehicles
Higher standard than that required by local residents and businesses
The length and value of local roads highlights their importance and the contribution they make to the national economy.

11. Higher Productivity Investment Plan
$200m per annum for 5 years
Additional investment in the first mile/ last mile on identified freight routes
Assets assessed and investments made
Regional groups of councils must be supported
ALGA has put forward a proposal that the Government should establish a specific program to target freight productivity at the local level through funding for regional groups of councils.
The focus on improving freight productivity through heavy vehicles continues to be one the key reform agendas pursued by Transport Ministers and supported by COAG but there are going to be problems if the local road component of freight routes is unfit for the task.
Estimated direct benefits over first three years of a targeted freight investment program.
2,400 jobs and increase in GDP of $1.07b, not including increased productivity benefits from more efficient freight movements.

12. Permanently Funded Roads to Recovery
R2R highly successful since 2001
Increased road safety, productivity and equitable access
Part of local roads expenditure of $7b
Objective is permanently funded and doubled R2R program
In addition to targeted investment in freight routes ALGA will continue to advocate for greater funding to enable councils to maintain their local roads to a standard required by the community. The R2R program has been extremely successful and we have argued strongly over many years on the importance of the program being permanent and at a much increased level. There are real positive returns for the economy from increased R2R investment.
In 2016 we estimated that the direct benefits over first three years of a permanent and doubled R2R program would be 4,100 jobs and increase in GDP of $1.72b.
The Government has removed the sunset date for the R2R program and that basically means the program is permanent. This is fantastic, but, in reality, the funding levels will be determined each year by the Government. ALGA in partnership with every council across Australia will need to argue strongly to ensure to ensure that the funding is allocated every year from now on, and not redirected to other government priorities.
We have been successful in advocating for higher funding for the R2R program and from the annual funding base will increase to $400m.

13. Community Infrastructure
Maintains community cohesion and workforce
$300m per annum for 4 years
Targeted at community facilities, parks and recreation, stormwater, airports, etc
11% of local government infrastructure in poor or very poor condition
Maintaining and proving the necessary community infrastructure remains a challenge for all councils. This is a massive task.
One of the most successful programs implemented during the response to the Global Financial Crisis was the Regional and Local Community Infrastructure Program – RLCIP.
We need another program similar to this which supports councils and provides a positive stimulus to local economies.
I have written to all councils, including yours, asking them to provide ALGA with 3 examples of community infrastructure projects which could be funded through a new program. Please make sure you give us your 3 projects.
Estimated direct benefits over first three years of a Community Infrastructure Program
3,700 jobs and increase in GDP of $1.41b.

14. Other Priorities Funding for climate change plans
Municipal funding for indigenous communities
Human services
Natural disaster funding
Certainty for direct funding
While there has been little said about climate change in recent months with the focus being on energy security, the problem is not going to go away. Councils have done a lot of work at the community level to tackle mitigation and adaptation and they will do more, but a positive program supporting councils will help communities to implement the plans which many councils have developed in recent years.
Estimated direct benefits over first three years of a climate change support program: 1,200 jobs and increase in GDP of $453 million.
Additionally, we have a number of longer term objectives which cover key areas such as indigenous resourcing, human services, natural disaster funding and greater certainty for Federal funding of local government.

15. ALGA’s Future Priorities
Regional Development
Review in 2017
Links between councils and RDAs
Innovation and Digital Transformation
Smart Cities and Suburbs Program with $50m
Council innovation hubs
One of the key activities facing the ALGA Board is to review and ensure its priorities remain relevant and achievable.
Key areas which the ALGA Board has identified as future priorities include regional development, which the Government itself flagged in the 2016 Budget papers would be reviewed in 2017 although we are still waiting for that review. There are problems with the ad hoc nature of programs and the lack of alignment between Commonwealth and state approaches, let alone the lack of engagement between councils and RDAs. This is an area where ALGA would like to see a stronger approach by Government.
The area of innovation and digital transformation remains a focus for the Government and applications from councils for the $50m Smart Cities and Suburbs program closed on 30 June.  
The Board remains interested in exploring with the Australian government the possibility of using council facilities, including libraries in some jurisdictions (not Tasmania) to provide innovation and digital hubs to stimulate local economies and help to overcome the digital divide large numbers of Australians do not have private access to the internet.

16. ALGA’s Future Priorities
Infrastructure Agenda
Infrastructure Funding/Cities Deals
Future Funding of Roads
Federal Funding of Local Government
FAGs quantum and indexation
A 1% share of taxation - $3.8b last year
Infrastructure remains a key issue including how community infrastructure is better funded, the question of value capture mechanisms and Cities Deals which the Government covered off in its Smart Cities Policy announced in April last year.
We now have three cities deals including one here in Tasmania – Launceston. The Launceston and Townsville deals have moved to the implementation stages but the Western Sydney deal remains a work in progress. Other deals are expected to follow, particularly I metropolitan areas but the opportunities for councils are unclear.
One area of future long term uncertainty in infrastructure funding relates to roads. All levels of government recognise the need for a debate on how we fund our roads into the future. Local government gets a substantial proportion of the money it spends on roads (over $7 billion per annum) from the Commonwealth (up to $2billion this year with extra R2R) and yet the Commonwealth’s revenue stream from fuel excise is declining. We need to find alterative sources of revenue from direct charging by kilometre driven and local government needs to protect its own revenue through the development of community service obligation mechanisms given that many of our local roads have very little traffic.
Finally, ALGA is looking at the current mechanisms for Commonwealth funding of local government and what opportunities there are for reform to ensure that the funding is sustainable. In particular, we are advocating for a return to 1% of Commonwealth taxation for the FAGs.

17. Closing thoughts Involve, engage, say thank you Tell your stories
Buddy up - regional strategy matters
Trusted partners - we deliver
I said at the beginning of this talk that I wanted to up-date you on the work of ALGA. I also want to challenge you.
There are literally hundreds of competing groups that lobby Canberra constantly for projects, programs and Commonwealth support. There are 3 thing that differentiate ALGA and local government from these other groups, and if we use these differences creatively it makes us very powerful.
The first is that we represent communities from right across the country – (in reality that is every federal electorate);
The second is that our arguments, generally for funding, are based on fact; and
The third is that every claim we make at the national level can be backed up locally.
When ALGA says councils need money to fix local sports facilities, every council in Australia can point to a project that needs to be supported. Ladies and gentlemen that is very powerful. National proposals backed up with local projects is a politically powerful approach and one which resonates in Canberra.
So my challenge to you is to help us to help you. We need the stories and the case studies that will support our national agenda. When I talk to Federal Ministers or backbenchers about the needs of councils it’s the stories that cut through better than academic reports or general propositions.
The next Federal Election may well be held in late 2018 or early ALGA will be developing its election campaign and political strategies to progress its priorities, many of which I have outlined to you today. As we do this, we will, from time to time ask for your support. Whether it is providing us with stories or asking you to speak with your local member and other Federal candidates to back up our national agenda.
ALGA is keen to work with you and together we can make a real difference.

18. Thank You Questions?

19. Thank you