June 19, 2013 | Nick

The Local Government Referendum

This week, the Parliament has been debating the Constitution Alteration (Local Government) Bill 2013.  It is the legislation to authorise the amendment of the Constitution to recognise local government.  If the referendum is successful, section 96 of the Constitution will read as follows:

During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State, or to any local government body formed by a law of a State, on such terms and conditions as the Parliament thinks fit.

(the bold part is the amendment to be inserted)

So, the point of the amendment is to allow the Commonwealth to bypass state governments and provide funding to local governments “on such terms and conditions as the Parliament thinks fit”.  It carries with it the obvious potential to turn local governments into clients of the Commonwealth Government, a body which, because of its superior power to raise revenue, is likely to become a much greater influence over local governments.

That is as it may be, but the purpose of this post is to examine the explanatory memorandum which comes with the bill.  A bill’s explanatory memorandum is, as a matter of statutory law, a document to be taken into account in interpreting a bill.

It makes extensive commentary about the effect of the amendment.

For example, the memorandum says:

“The amendment would not prevent a State abolishing any local government body, or curtailing the activities or expenditure of a local government body.”

One wonders whether a power to destroy a local government could be exercised if the local government had just received Commonwealth funding and, if it could, what would happen to the money?

Also, if that is correct, what is to stop a State from simply legislating to preclude any local government ever from spending money it obtained from the Commonwealth.  Obviously such a law would be at odds with the intention of the people in authorising such an amendment at a referendum.

State legislatures are, as an incident of recognition of state Supreme Courts in the Commonwealth Constitution, precluded from abolishing or seriously curtailing the jurisdiction of their respective Supreme Courts.  If that is the effect of recognising those institutions, why would recognition of local government bodies not have a similar effect?  The ability to abolish a local government yet to fulfil the terms of a Commonwealth financial grant would be an intrusion on the Commonwealth’s new power to grant that assistance.  It is difficult to see how those two prerogatives can stand together.

Crucially, the explanatory memorandum cannot have its ordinary effect.  An explanatory memorandum has value as an aid to interpretation because it is before the Parliament at the time that the Parliament passes the legislation; it is a window into the intention behind the legislation.  There will be no explanatory memorandum before the people when they deliberate on the referendum question.  There can be no statutory explanatory memorandum for the Constitution.  The words which are proposed will be construed according to their ordinary meaning and without any reference to the explanatory memorandum.

For that reason, the explanatory memorandum is a fraud.

It is a matter of common experience that tensions arise between State Governments and local governments from time to time.  A few years ago, the Queensland State Parliament passed laws amalgamating local governments because some of them were hopelessly insolvent.  Many citizens were intractably opposed to the amalgamations.

If unpopular amalgamations were to happen in the future, one could well imagine a local government in receipt of unexpended Commonwealth monies arguing that abolition of it would intrude on the Commonwealth’s exercise of its power under section 96 to grant the money.

The proposed Constitutional amendment is dangerous and the arguments in favour of it are erroneous.

Posted by Nick at 7:23 pm | Comments (6) |


  1. Nick please remember that unless you want to sound like, & be considered to be like a certain red head, you have to tell the truth.

    You say “A few years ago, the Queensland State Parliament passed laws amalgamating local governments because some of them were hopelessly insolvent”.

    Now this is totally untrue. Everyone knows that it was just a typically vindictive act by Beattie.

    The councils, who received a large part of their income from water, had resisted the near broke, & desperate Beattie governments grab for their water income. Vicious as ever, Beattie pulled the amalgamation stunt, just to show them who was boss.

    That it cost rate payers millions, & totally ignored community interests was of no concern, he had stamped his foot, & shown them.

    Now I am in full agreement with the rest of your post, but please don’t spoil your article by changing history, even if only for the point of brevity, & avoiding distraction.

    Comment by Hasbeen — June 20, 2013 @ 11:05 am

  2. You raise some interesting points Nick.
    One would think that a few amendments need to be proposed, in draft form, before this proposal is legislated into law.
    One might be that the state would need to show due cause, for dissolving a duly recognised legal entity.
    Such as proven fraud or corruption?
    Or an entity so divided as to be unworkable!
    Not all that different from the Labour party, where one backbencher simply can’t or won’t accept the umpire’s decision?
    If the entity is then dissolved, it should have access to the high court for redress, if it feels it has been unjustly treated, or dissolved or amalgamated, simply to allow the state to confiscate its resources.
    In any event, should the dismissal or amalgamation stand after a high court challenge, any monies held in council coffers or accounts, ought to be returned, in whole or in part, to those who provided same!
    The new entity, would then be obliged to raise its own resources, rather than “legally” plunder those of the former dismissed or dissolved entity.
    This would likely deter a state body from acting precipitously, simply to confiscate funds, or use those of solvent entities, to prop up those that were so badly managed, as to become insolvent!
    The object of the referendum, ought only seek the will of the people, to change the constitution.
    The mechanisms, ought to then be down to the federal Govt..
    Who are likely to be fought tooth and nail, by state legislators, who see this as an attack on their power and influence!
    Personally I see it as long overdue reform, that in the first instance, robs highly politicised state govts, from acting as virtual roadblocks in the path of progress; or the expressed will of the people!
    Alan B. Goulding.

    Comment by Alan B. Goulding — June 20, 2013 @ 11:33 am

  3. Before considering the idea of ‘can we recognise local governments’, someone should take a step back and ask ‘why’. And ‘why now’.

    The very idea that this bill receives more oxygen than a proposed referendum to recognise the first Australians is sad indeed, and an indictmenton those who are working to deliver it to the Australian people. As to the why, who can convince me, or anyone that we want to recognise a body that provides waste services and approves r rejects development applications is welcome to try. Herein lies the problem with this bill: what is the point?

    Comment by CSF — June 24, 2013 @ 8:09 am

  4. I would have thought that if the amendment goes ahead as is, the Commonwealth would have the right to declare upon granting of money to a state, that if the money were not spent for the stated reason for requiring it and my the body receiving, it would have to be returned to the Commonwealth, as is the case for all grant monies from whatever body. Grant monies must be acquitted and the recipients must show that it has been used for the purpose intended.
    Therefor if a state government were to dissolve a local government council or amalgamate councils, then that money received by the original council would not be able to be spent by the body it was intended to benefit.

    Comment by Dereka Ogden — June 25, 2013 @ 4:12 pm

  5. Sorry I meant that if that Commonwealth granted money to a local council, not a state.

    Comment by Dereka Ogden — June 25, 2013 @ 4:13 pm

  6. I believe that the first Australians inclusion in the constitution, will be subjected to a referendum, during the next term of parliament, given it also has bipartisan support.
    As does recognising local Govt..
    Local Govt. recognition is equally or more important, as an economic imperative for the whole country and all its people.
    Not that in any way diminishes the requirement for finally including the first people in the constitution.
    If both issues are satisfactorily concluded during the next term of parliament, nobody will complain?
    I mean, Australia’s first peoples have been waiting over 200 years!
    So a couple more is neither here or there, and local Govt. has been waiting for over a hundred years for just this proposed rationalisation.
    Both issues are important!
    One more so to a very small demographic.
    And a very good reason to get it right, with the first alteration of the constitution!
    It’s not a case of either either, but rather both!
    Alan B. Goulding.

    Comment by Alan B. Goulding — June 25, 2013 @ 5:49 pm

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.