Funding the Future: Financial Sustainability and Infrastructure Finance in Australian Local Government

Abstract

The existence of a financial crisis in Australian local government cannot be gainsaid. Over the past decade, a host of state and national inquiries have established that not only do a large number of local councils suffer straitened financial circumstances, but an immense local infrastructure backlog has also developed. Moreover, the infrastructure shortfall is intensifying as local authorities divert funds away from desperately needed infrastructure investment and maintenance in an effort to maintain current service provision. As a result, the funding required for local infrastructure now exceeds the financial capacity of most local councils using 'own-source' revenue. Despite almost universal agreement on the causes and consequences of the fiscal crisis, no corresponding consensus holds on the most suitable public policy measures for remedying the problem. Numerous solutions have been advanced, from 'internal' reform aimed to improve asset management, through to 'external' funding derived from Commonwealth and state transfers. While debate on optimal public policy has been vigorous in the popular press, substantive contributions have been scattered in copious and often obscure official documents issued by public agencies, departments and inquiries, as well as articles in far-flung academic journals. This has led to a curious fragmentation of the debate and a dearth of serious engagement between protagonists of different public policies.