Productivity Commission Inquiry on First Home Ownership

1. Background In Australia, local government is established under State/Territory legislation and its structures, powers and functions are determined by that legislation. In all jurisdictions in the last 10-15 years, the relevant legislation creating and regulating local government has been reviewed and significantly amended or replaced with new legislation that gives local councils greater general competence powers. In most jurisdictions it was the first time that the legislation creating and regulating local government had been reviewed so comprehensively for more than forty to fifty years. Generally speaking, these changes enable local governments to provide a wide range of services or to undertake functions to meet the needs of their local communities which may be beyond their statutory requirements. This includes activities relating to the provision of affordable housing in their local communities. Local government is an elected sphere of government, representative of and directly accountable to, its local community. The fact that it is elected and responsible for a broad range of services in a clearly defined geographic area, means that local government is potentially better placed than the other two spheres of government to understand and meet the needs of its local community and to respond to those needs in ways that are appropriate to local conditions. Local government is multifunctional and, unlike other spheres of government, is able to combine and integrate services tailored to meet local needs. These characteristics of local government also raise some dilemmas in the management of local areas. For example, local governments are often treated as the servants of State/Territory Governments, creating tensions over direction setting and accountability. The fact that local governments also have a measure of choice over the range of non-statutory functions they get involved in, as well as the manner in which they interpret their statutory functions, results in a considerable range of differences and diversity in local councils within and between jurisdictions. The diversity of local government is apparent through a number of characteristics, including the different powers and functions, the level of financial resources, population size, geographic area, location and human resources. Any consideration of local government's role in affordable housing must therefore be cognisant of the diversity of roles and functions and the diversity of issues confronting local governments throughout Australia, not just on the urban fringes of the capital cities or centres experiencing high housing prices.