Australian Politics and Policy - Senior, 2019a

Australian Politics and Policy
in each jurisdiction. Generally, councillors act as formal decision makers and
approve strategic plans, policies and budgets prepared by the executive. They are
also responsible for appointing and overseeing the performance of the general
manager/CEO in accordance with an employment contract. 12 The mayor is
typically a ceremonial figure, although there are differences here too. For example,
mayors in Queensland are mostly directly elected and have wide powers to prepare
major policies and budgets. In contrast, many metropolitan mayors in New South
Wales (NSW) are indirectly elected and share responsibility for major policies and
budgets with councillors and general managers. 13
Funding
Australia has a high level of vertical fiscal imbalance compared to other countries. 14
This means the level of government that collects revenue to fund services is often
not the level responsible for delivering them. 15 In Australia, the national government
collects the most revenue from taxation (over 70 per cent) but is responsible
for less than half (about 40 per cent) of all public sector expenditure on service
delivery. 16 To remedy this situation, Australia uses a complex system of intergovernmental
transfers to reallocate national revenues to and between state,
territory and local governments. 17 A formula of horizontal fiscal equalisation is
then used to ensure that, at least theoretically, all governments have the financial
means to provide similar levels of service to their communities. 18
LocalgovernmentisthemostevenlymatchedlevelofgovernmentinAustralia
in terms of the tax revenue it collects and the amount it spends on services.
However, local governments are increasingly handed ‘unfunded mandates’ as
higher levels of government transfer responsibility for service delivery to them
without transferring revenue or providing new revenue powers to fund these
services. 19 Nationally, local governments collect about 3 per cent of all tax revenues
and are responsible for about 6 per cent of total public sector expenditure on
service delivery. 20 Of the $17 billion in revenue they collect annually, property
rates account for about 40 per cent. 21 Australia’s local governments hold around
$400 billion in assets and infrastructure. 22 Housing and community amenities
(24 per cent), transport and communication (22.5 per cent) and general public
12 Office of Local Government n.d.
13 New South Wales Electoral Commission 2019.
14 OECD 2014.
15 Charbit 2006.
16 ABS 2018.
17 Phillimore and Fenna 2017.
18 Stilwell and Troy 2000.
19 Charbit 2006.
20 Australian Local Government Association 2018.
21 ABS 2018.
22 Australian Local Government Association 2018.
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