By Laureate Professor Cheryl Saunders AO

The latest proposal to amend the Commonwealth Constitution to ‘recognise’ local government may go down in history as one of the most inept attempts at constitutional change in Australia. Insofar as it has an indirect link to the decisions of the High Court in Pape v Commissioner of Taxation [2009] HCA 23 and Williams v Commonwealth [2012] HCA 23 it merits a post on Opinions on High. In any event, there are lessons to be drawn from the history of this proposal, as a guide to the formulation and conduct of future referendum proposals.

Constitution Alteration (Local Government) 2013 (Cth) passed both Houses of the Commonwealth Parliament on 24 June 2013. The impetus for it derived from a long-held desire on the part of local government to be recognised in the Commonwealth Constitution as the third arm of Australian government. This project is fraught because recognition almost inevitably involves substantive change of some kind in the operation of the Australian federation, in which the relations between the other two arms of government already is under strain. A proposal cast in terms of symbolic recognition was rejected at referendum in 1988. An earlier proposal to establish a direct financial relationship between the Commonwealth and local government was rejected in 1974 (see here).

Pressure to try again mounted in the Commonwealth Parliament and in local government circles from 2006. In 2011, the government appointed an ‘Expert Panel’ to advise on recognition. The Expert Panel canvassed four different ways in which reference might be made to local government in the Commonwealth Constitution. One was to alter s 96 to enable the Commonwealth to make grants directly to local government. The Expert Panel noted that further questions had been raised about the constitutionality of existing direct funding programs by the High Court’s recent decision in Pape. In the event, a majority of the Expert Panel accepted that this was a ‘viable option’ for submission to referendum in 2013 as long as steps were taken to shore up political and public support. Even at the time, this did not seem a ringing endorsement.

Six months later, the High Court handed down its decision in Williams, in which a majority held that some spending programs required supporting legislation, which in turn would need to be attributable to a head of legislative power. Williams concerned the validity of Commonwealth funding of chaplains in schools and had nothing to do with local government. Nevertheless, it further heightened the possibility that at least some programs whereby the Commonwealth makes grants directly to local government might be invalid. In November 2012, the Parliament appointed a Joint Select Committee on Constitutional Recognition of Local Government to report on the conclusion of the Expert Panel. A majority of the Joint Select Committee recommended that the referendum on ‘constitutional recognition’ be put to the voters at the federal election.

There are significant substantive objections to adding local government to s 96 of the Constitution, which I have canvassed elsewhere. Even leaving these aside, however, the proposal was dogged by other difficulties.

The first was ambiguity of purpose. No-one explicitly asked what ‘recognition’ of a level of government should entail; a task rendered even more relevant by the parallel debate about constitutional recognition of indigenous Australians. It was simply assumed, rather doubtfully, that empowering the Commonwealth to make conditional grants to local government constituted recognition of the latter. The alternative possibility, that the alteration was designed to overcome a shortfall in Commonwealth power suggested by decisions of the High Court was complicated by the Commonwealth’s official position that its power was still intact. In the circumstances, it was hard to mount a compelling case for the proposal on either of these two, quite different bases. An argument that the amendment was necessary ‘just in case’ was weak. It was weakened even further by the indisputably secure power of the Commonwealth to make conditional grants to local government through the States.

The second difficulty revolved around levels and sources of support for the proposal. The Expert Panel noted (at 21) that its Newspoll research was

consistent with a broader conclusion that more voters are likely to express support if the form of recognition appeals to ‘higher-order’ concepts and appears to be of positive benefit to all citizens — whether democratically, or by strengthening local government accountability, or by increasing or improving local services, or by improving the entire federal system.

Neither the political elite nor, apparently, local government itself supported ‘democratic recognition’, however, causing the Expert Panel to conclude that it had ‘no reasonable prospect of success’. ‘Financial recognition’, on the other hand, had more political support, including from the then federal Opposition led by Tony Abbott. The Expert Panel’s wary endorsement of the proposal was conditioned on the need to further strengthen this base through negotiations with the States to secure their support and for a public information campaign. But as time went on, State support was not secured; the position of the Opposition became increasingly equivocal; and the public information campaign itself became a source of controversy.

As the referendum machinery legislation then stood, spending on a referendum was limited to the production and distribution of the yes/no pamphlets. A small number of Opposition MPs opposed the referendum bill in the Parliament to ensure that a ‘no’ case would be prepared. Relying in part on recommendations from the Expert Panel and the Joint Select Committee the legislation was amended to suspend the spending restriction for the purposes of the local government referendum. The government exercised its resulting discretion to divide the available funding for the referendum in proportion to the votes for and against the proposal in the Parliament, allocating $10 million to the ‘yes’ case and $500,000 to the ‘no’ case. An additional $11.6 million was made available for a ‘neutral’ civics education campaign, to be conducted by the Department of Regional Australia. This development exacerbated criticism of the proposal and raised some important questions of principle about what a ‘fair’ referendum involves.

In the end, in any event, nothing happened. The referendum was scheduled to be held in conjunction with the federal election on 14 September 2013. The Constitution requires two months to elapse between the passage of the proposal through both Houses and its ‘submission’ to voters. The Electoral Commission had advice that this two month period must have expired even before early voting ballot papers were issued. A 14 September 2013 referendum date met the two month deadline. But the change of electoral date to 7 September 2013, following the change of Prime Minister, did not. It was not possible for the referendum to proceed.

There is also a maximum time limit of six months within which a referendum must be put. By 14 March 2014, it will be too late, unless the bill is again passed by the Parliament. It is highly unlikely that it will be put to the voters within this time. A referendum on its own is expensive. There would be considerable opposition to putting indigenous recognition and local government recognition to the voters at the same time, even if the former proposal is finalised over the next few months, which is unlikely. There has been some speculation that the local government proposal might be put to the voters with a double dissolution under s 57 of the Constitution. This is unlikely to happen soon enough, however, if it happens at all; s 57 has its own in-built time-limits. And in any event the government may be unwilling to muddy the waters of the issues at stake in a double dissolution by putting the local government referendum at the same time.

There is a possible sleeper in all this, however: the plaintiff in Williams, Ronald Williams, is back in the High Court. On this occasion, the plaintiff is testing whether there is a head of power to support the extraordinarily general ‘legislation’ enacted by the Parliament as loose authority for executive spending after the High Court handed down the first Williams case. Again, the subject of the challenge is the school chaplains’ scheme. The decision may well throw no light on local government funding at all. It will certainly not be a reliable indicator of the validity of particular local government grants programs. Nevertheless, if it goes against the Commonwealth, as seems likely, we can expect the debate on local government ‘recognition’ to begin again.

And then it will be time to engage with the substance.

AGLC3 Citation: Cheryl Saunders, ‘Reflections on the Local Government Referendum That Wasn’t’ on Opinions on High (23 September 2013) <https://blogs.unimelb.edu.au/opinionsonhigh/2013/09/23/saunders-local-government-referendum>.

Laureate Professor Cheryl Saunders AO holds a Personal Chair in Law at Melbourne Law School.