Over the past decade or so there has been considerable attention given to the state of Australian local governments' finances, the capacity of local governments to fund reasonable and appropriate service levels, why local governments may have financial challenges and what if anything should be done about these matters.
There have been a significant number of comprehensive reports on these topics. Some have been commissioned by local government representative bodies at the state or national level and some have been initiated by the states and the Commonwealth. There has also been a major review of Australia's overall systems of taxation.
This paper explores the key themes and findings for local government of these reviews and draws on related research. To put this in context it first provides contextual background and analyses local governments' financial performance and capacity. It then considers responses that may be warranted by all three spheres of government.