Local Government in Australia during a global

economic downturn

Cr Geoff Lake President

Australian Local Government Association

Outline of Presentation

1. Local Government in Australia

2. The impact of the global financial crisis (GFC) in Australia

3. Implications of the GFC for Local Government in Australia and what we are doing in response

Local Government in Australia

• 565 councils • A creation of state governments

• 2% of GDP (annual expenditure of $25 billion)

• Employs 170,000+ staff

• Very diverse in terms of population and area

– Population ranges from 1 million to less than 200 people

– Area from 2.5 sq km to 378,000 sq km (size of Japan)

Local Government Finances and

Activities Local Government revenue sources: • Property rates 38%• Fess and charges 31%• Grants from other governments 13%• Interest 4%• Other 14%

Local Government expenditure:• Transport (incl roads) 25%• Housing and community amenity 24%• General Public services 15%• Recreation and culture 15%• Education, health and welfare 8%• Other Economic affairs 4%• Public order and safety 2%• Other 7%

Australian Local Government Association (ALGA)

• Voice of local government at the national level

• Influences policy development at the national level

• Member of Council of Australian Governments and 13 Ministerial Councils

• A vehicle for consolidated national effort across all Australian councils

Impact of the Global Financial Crisis National level

• Banking sector relatively strong• Global credit squeeze impact • Australia is a trading nation and exports

have suffered• Economy expected to contract by 1.4%

in 2008-09• Stimulus packages

– October 2008 $10.4b Economic Security Strategy

– February 2009 $42b Nation Building and Jobs Plan

Impact of the Global Financial Crisis

Local Government

• Beneficiary of economic stimulus

• Impact on rates and services

• Local Government investments

• Local Government Superannuation Funds

• Borrowing and the credit squeeze

What Australian Local Government is doing in response to the GFC

• Increasing spending on local infrastructure• Positioning to receive further stimulus

money from the Australian Government• Maintaining (or expanding) local services• Strengthening local government’s

institutional place in Australia’s three-tiered system of government

• Revisiting where our collective efforts are focused

External funding provided to local government

Federal Govt

$2.5 billion (68%)

State Govts

$1.2 billion (32%)

Local government expenditure on influencing government

State/territory level($65m)

National level($2.25m)

Final Word

• Unprecedented opportunity for local government in Australia at the NATIONAL level

• Increasing role for LG and Australian Government decreasing role for state governments

• New relationship between Australian Government and LG

• BUT, some challenges – e.g. community perceptions and councillor performance