Posted on June 26, 2013 by

A referendum on recognition of local government

At the next federal election on 14 September 2013, it is likely that Australian voters will be asked to vote on a change to Australia’s Constitution that would give some recognition to local government.

The Constitution Alteration (Local Government) 2013 was passed in the House of Representatives on 6 June 2013, and then by the Senate on 25 June 2013.

If voted for by a majority of people in a majority of States, the bill will amend s96 of the Constitution, so that the Federal Government has power under that section to make funding grants directly to local governments.

Whilst the proposal has support from the federal government and local government bodies, there is little support for the proposal from State governments.


Direct funding of local government has occurred for many years. However, as we have previously reported, comments by the High Court of Australia have cast doubt over the validity of some programs funded directly by the Federal Government. These doubts extend to programs involving direct funding of local government such as the Nation Building Roads to Recovery Program, Regional Development Australia Fund and the Local Community Infrastructure Program.

In December 2011, the Government appointed Expert Panel on the Constitutional Recognition of Local Government (Expert Panel) presented its report. The Expert Panel recommended that ‘financial recognition’ of local government, through an amendment to s96 of the Constitution, was a viable option for reform, on the conditions that the Federal Government negotiate with the States to secure their support, and that there was ‘informed and positive public engagement with the issue’ including a nationally funded education campaign.

The Parliament then established a Joint Select Committee on Constitutional Recognition of Local Government (Committee). Following an inquiry, the Committee presented its report, recommending that a referendum on the financial recognition of local government be held at the 2013 federal election.

The proposed amendment

Section 96 of the Constitution is currently headed ‘Financial assistance to States’ and provides that ‘…the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.’

Under the proposed change, the heading to s96 would  state ‘Financial assistance to States and local government bodies’ [My emphasis] and would provide that ‘the Parliament may grant financial assistance to any State, or local government body formed by a law of a State, on such terms and conditions as the Parliament thinks fit.’ [My emphasis]

‘Financial recognition’

The amendment to s96 is described as ‘financial recognition’ of local government and is aimed solely at removing uncertainty about direct funding of local government by the Federal Government.

The amendment would not amount to a legal recognition of local government as an entrenched third tier of government in Australia. That is, local government would remain a creature of State government and at least in theory, it would be open to a State government to abolish local government.

However, the changes would provide certainty for ongoing direct funding by the Federal Government to local government.

State support

The Report of the Expert Panel recognised that State support for the proposed amendment was important, and recommended that the Federal Government negotiate  with states to secure their support.

State support for the amendment does not appear to be strong. NSW and Victoria have publicly opposed the amendment. Tasmania has indicated that it is ‘agnostic on the issue’. Queensland has expressed conditional support,  whilst South Australia supports constitutional recognition of local government ‘in principle’. Western Australia has indicated that it would be prepared to support constitutional recognition, provided that it does not give the Federal Government new powers.


This is not the first time that Australian voters have been asked to vote on an amendment to the Constitution concerning local government.

In 1974, an amendment was proposed that would give the Federal Government powers to borrow money for, and make financial assistance grants directly to, any local government body.

In 1988, a referendum was held to recognise local government in the Constitution through an amendment that would have required each State to provide for the ‘establishment and continuance of a system of local government…’.

Both referendums were unsuccessful, and it remains to be seen whether history will repeat itself on 14 September.