Don't listen to what Canberra says, writes Chris Berg. 'The local government referendum has nothing to do with local communities or anything like that.'

Don't listen to what Canberra says, writes Chris Berg. 'The local government referendum has nothing to do with local communities or anything like that.' Photo: Andrew Meares



If the Gillard government has its way, we'll have an extra question to answer at the federal election in September: do we want to amend the constitution to recognise local government?


Sure, this referendum sounds harmless, almost touching. Local government likes to cultivate an image of community and grassroots civic engagement. Why not acknowledge it exists in our great national charter?


Well, lots of reasons.


It's a bit of a misnomer to call local governments ''government'' at all. Administratively, they are more like state government departments.


But unlike, say, the Victorian Department of Education, they are virtually unaccountable, entirely unscrutinised, and deeply deluded about their own influence and importance. Council benches are filled with a mixture of naive do-gooders and cynical political apprentices looking for a safe state or federal seat.


No wonder a quarter of us don't vote in local government elections. Why should we give these clowns any more legitimacy or esteem?


Don't listen to what Canberra says. The local government referendum has nothing to do with local communities or anything like that. It's a power play - part of a long-running campaign by the Commonwealth to free its spending decisions from parliamentary scrutiny and undermine the states.


To understand the significance of the September referendum, we have to go back to an obscure bill passed by Parliament last June: the Financial Framework Legislation Amendment Bill (No 3) 2012. This bill received almost no press attention. It was supported by all sides of Parliament. The Coalition half-heartedly put up an amendment, but once that was rejected, it backed the bill anyway. The bill was made law in three hours.


Yet it was one of the most undemocratic and scandalous pieces of legislation passed in recent years. Forget the carbon tax. This is what Australia should be most angry about.


The bill authorises the government to spend money on 415 areas of public policy without having to ask Parliament for permission ever again.


It was quickly written in the wake of the successful High Court challenge to the school chaplains program. The court found that if the government wanted to spend money on a program, it was required to pass a valid law through Parliament - which it had not done in the case of school chaplains. This is not a trivial requirement. Parliamentary scrutiny is the essence of representative democracy.


The government's solution was smart-alecky, brazen and obnoxious. The Financial Framework Legislation Amendment simply authorised spending on everything at one fell swoop - everything from United Nations contributions, to ''diversity and social cohesion'' grants, to industry subsidies. Local government is in there, too. Now the government can do anything it wants. The bill even says the government can spend what it likes on ''political party secretariat training''.


The constitutional scholar Anne Twomey has described this as an ''abject surrender'' by Parliament to the executive.


The proposed local government referendum builds on the 2012 bill. The Commonwealth wants free rein to fund councils directly, bypassing state governments. True, it wouldn't be a new power. The Commonwealth has been giving money to local government for a while. Some of the most wasteful parts of Kevin Rudd's stimulus program went through councils.


But the government thinks such spending might be unconstitutional, given the school chaplains decision and a similar 2009 High Court case, Pape v Commissioner of Taxation.


Let's dwell on that.


The Commonwealth government believes it is breaking the law. Yet instead of ceasing its illegal practice (as citizens would be required) it wants us to rewrite the constitution instead. And all this four years after the Pape case raised the problem in the first place.


What if the referendum fails? Will it stop handing cash to local government? Of course not.


No, the real story here is how the Commonwealth is trying to erase all parliamentary, legal, and constitutional impediments that limit its spending. The referendum is just a small skirmish in a larger war.


Local government recognition has always been a tool to neuter the states. The last two referendums on this question were under Labor. Both failed. Gough Whitlam was clear about his real goal during the 1974 attempt. States had ''little relevance to today's needs''. Funding local government directly would undermine the power and authority of those states.


The Coalition might be expected to oppose Gillard's referendum. Federalism is a bedrock principle of Australian liberalism. But Tony Abbott is no fan of the states, either. He supports a yes vote.


There's a more banal reason for the referendum. Julia Gillard promised one as part of her deal with the independents. Yet that was a political decision made in the heat of 2010. It's one promise she should break.


Happily, most referendums fail. Only eight of the 44 since federation have been successful. This one deserves to join the losers.


Chris Berg is a research fellow with the Institute of Public Affairs. Twitter: @chrisberg