'Constitution won't guarantee funds'

THE recognition of local government in the Australian Constitution would not guarantee councils get their fair share of funding, former Liberal Party leader John Hewson warned on Monday.

Dr Hewson, speaking after a special forum on the Henry tax review at the Australian National University, said the problem both states and local councils faced, in not getting enough funding from the Federal Government to cover their costs, was no closer to resolution.

Dr Hewson criticised the current 24-hour media news cycle and a resistance by the Federal Government to meaningfully face such problems in a genuine public debate.

While the government last year held a forum on tax, Dr Hewson said such talkfests had not resulted in any lasting change for the nation's tax system.

"The current political system simply does not have enough scope to look at the initiatives the country needs to face," he said. "Something Ken Henry (special advisor to the Prime Minister) highlighted was that his tax review was not direct recommendations for change, but rather a ways document on what should be done to help Australia to adjust to its changing economy - it simply identifies the issue in the hope the debate will ensue."

Dr Hewson, an academic economist, said the hope that constitutional recognition of local government would secure the funding it needed were unfounded.

"If the states cannot get what should be their share of the goods and services tax, then there's no certainty local governments could," he said.

He said the mining tax, which was a proposal of the Henry tax review, was widely panned as a failure for the regions.

"The government has handled this very badly, and the lack of the company tax rate which the mining tax was meant to fund, means the opposition has been able to score point after point against the government," he said. "The argument that the tax should fund infrastructure in the regions has failed because rather than sending the revenue into a sovereign wealth fund where it can be tracked, it will go back into consolidated revenue."

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