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ASALGP SEMINAR

ASALGP SEMINAR. BLOEMFONTEIN 7 NOVEMBER 2002 PRESENTATION BY PETER EMERY. DISCLAIMERS. (1) Any views expressed are mine only (2) No criticisms of any person or organisation in South Africa, or of any of their policies, are intended or implied

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ASALGP SEMINAR

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  1. ASALGP SEMINAR BLOEMFONTEIN 7 NOVEMBER 2002 PRESENTATION BY PETER EMERY

  2. DISCLAIMERS (1) Any views expressed are mine only (2) No criticisms of any person or organisation in South Africa, or of any of their policies, are intended or implied (3) Notes prepared without detailed knowledge of other presentations - apologies for any duplication (4) Presentation is very brief. If anyone wanted to have further information or analysis on any point please do not hesitate to ask. Home contact details as follows:- Peter Emery PO BOX 648 CLARE South Australia 5453 AUSTRALIA Phone: 61 8 8842 2558 fax: 61 8 8842 3976 email: emcorp@bigpond.com

  3. SOME COMPARISONS FOOTNOTES ON NEXT PAGE

  4. (a) Not including District Management Areas (25 of these) (b) World Bank data (c) South African figures are Statistics SA data for average per capita personal income. Low degree of reliability. Australian figures are average individual taxable income. There is no comparability at all between figures shown for the levels of personal income in the two countries. The point of the figures is to illustrate the much wider range of average incomes in South Africa. (d) Of this, 830,000 km2 not incorporated (ie no local government) - arid country

  5. SOME FEATURES OF INTERGOVERNMENT RELATIONS IN AUSTRALIA (1) No mention at all of Local Government in the National Constitution - State legislation creates and governs local government (2) High concentration of tax revenue in National Government (personal and corporate income tax, good and services tax, taxes on tobacco, liquor etc) (3) States significantly dependent on National grants (4) System of national grants to the States incorporates full equalisation - ie fully compensates for lower taxable capacity and higher expenditure needs in the “poorer” States (eg South Australia). (5) The principal National grants for local government go first to the States which have established independent statutory Commissions to recommend the distribution between local authorities in each of the States (6) These National grants are distributed basically on a fiscal equalisation basis but there are exceptions and aggregate amount is insufficient to fully equalise - this disadvantages low socio-economic suburbs and rural areas in particular (7) Generally State government grants for local government are relatively small and normally not on an equalisation basis (8) Tendency for National and State grants to be more on an application basis (9) Interest at National level in local government generally small - exceptions arise occasionally eg currently a temporary program of grants for roads as part of pre-election spending

  6. CENTRAL LOCAL GOVERNMENT REGION OF SOUTH AUSTRALIA (1) A grouping of 15 Councils in mid-north of South Australia (2) A corporate body established as a “subsidiary” of member Councils under the Local Government Act (3) Councils are large in area but small in population (including lowest population Council in the State) (4) A varied set of functions:- - some direct service delivery (community transport and landcare) - representations to Commonwealth and and State Government Ministers and agencies - advocacy vis a vis the South Australian Local Government Association - funding submissions to Commonwealth and State agencies (5) The role of the Region is still developing, but its usefulness is clear

  7. SOME FEATURES OF STATE - LOCAL RELATIONSHIPS IN SOUTH AUSTRALIA POSITIVE FEATURES There has been cooperation between the 2 levels of government on major financial issues: • State Government guarantees liabilities of Local Government Finance Authority which lends to Councils at uniform rates • State Government reinsures certain centrally organised insurances of local government • extra State tax was imposed to create a Disaster Fund which helps rural Councils affected by disasters - eg floods, locust plagues • Small but useful program to help low population Councils with resourcing issues etc NEGATIVE FEAUTURES FROM POINT OF VIEW OF RURAL COUNCILS - State grants not on an equalisation basis - leaves many rural Councils under-compensated for disadvantages. -State agencies not yet fully sensitive to particular need in rural areas - eg public transport subsidies $156 per head in capital city, $22 per head in other parts of the State - “centralist” approach in decision-making generally

  8. INHERENT DISADVANTAGES OFTEN FACED BY LOW POPULATION RURAL LOCAL AUTHORITIES (1) Diseconomies of small scale generally (2) Financial resources (3) Difficultly in attracting well trained personnel (4) Lack of critical mass of “brain power” in the local authority and more generally (5) Lack of ready access to government bureaucrats (6) Infrequently visited by national government officials (7) Cost in time and money in attending meetings etc in national and State / Provincial capitals (8) Don’t have technical specialists / consultants “knocking on the door” (or is this perhaps an advantage?!?) (9) Grants systems may include a fiscal equalisation element - but often not sufficient to fully equalise

  9. EXAMPLES OF POLICIES OF NATIONAL AGENICES WITH PARTICULAR IMPLICATIONS FOR LOW POPULATION, LOW RESOURCED RURAL LOCAL AUTHORITIES IN SOUTH AFRICA (1) Very high degree of detailed national regulations - still growing rapidly (2) Large number and complexity of forms, questionnaires, statements etc to be submitted (3) So-called Alpha factor in the equitable share formula - grants to rural authorities discounted on account of assumed lower capacity to spend funds effectively (4) Certain grants subject to conditions (5) Legislation / policies relating to local authority borrowings - “market” approach Note: Above not to be read as commenting on appropriateness or otherwise of various policies

  10. SUMMARY OF PRINCIPAL THEMES • Underlying economic and other circumstances obviously very different in South Africa and Australia • As is the structure of inter-governmental relations • Naïve to think in terms of one “copying” the other • But these are some common issues where sharing of ideas and approaches may be useful • The particular issue close to our heart is what can be done (or avoided) to help low population, low resourced rural local authorities

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