Local governments play a critical role in addressing community health, wellbeing and climate challenges. Local government funding and more effective partnership between levels of government – through formalised agreements, capability-building and local knowledge integration – can create sustainable and effective programs for Australian communities.

Funding for local councils was one of the few hot-button debates at the recent Labor Party Conference, highlighting a truth that hits close to home – local government is the lifeblood of the nation.

Delegates supported ongoing annual increases to federal funding assistance as the way to save councils from the dire position they are in today. This is a big step following many years of advocacy from the local government sector, but only the first step in a longer process to make it a reality.

There is a growing recognition of the importance of local government, not just in Australia but across the world. In the UK, the new Prime Minister Andy Burnham is pursuing greater devolution of powers to regional mayors. On a global level, the United Cities and Local Governments and Global Taskforce of Local and Regional Governments are spearheading stronger elected local government partnerships. Focusing on health and wellbeing, Australian state and local governments also have a compelling story to tell.

In the face of growing budget deficits, increasing the amount of funding that goes to local government is important, but meeting the needs of communities is not just about new investment. We also need to rethink how levels of government work together.

Doing more with less is not sustainable

Multiple state and federal inquiries have identified issues with funding levels, which have gradually declined over the last three decades. The portion of tax revenue received by local governments has halved from 1 per cent to 0.49 per cent in 2026-27. At the same time, there is an increasing need for more services, roads and social infrastructure, particularly in growth areas and regional communities.

As pressures to do more with less intensify, some councils are returning to the mantra of “road, rates and rubbish” as a way to justify reducing services. Other councils are handing back contracts and removing themselves from non-legislated services. But for some councils, this isn’t an option - they’re already running the general store, providing the only daycare in town or subsidising the local GP.

Climate change alone is presenting its own set of challenges. Natural disaster events can severely affect communities and councils’ capacity to recover, disproportionately impacting regional areas. An independent review of Commonwealth Disaster Funding found that Australia is increasingly reliant on local communities and that “uplifting local government capacity and capability, as part of system-wide uplift, is required.” The review also found that while state and territory governments have “primary responsibility”, locally-led recovery gives Commonwealth investment “the best chance of success.”

Rather than doing more with less, it’s about doing more together.

Partnering for shared goals and improved outcomes, not just efficiency gains

There is already strong alignment across levels of government on health and wellbeing priorities. The role of councils is increasingly recognised across mental health, wellbeing and community safety as well as resilience, economic participation, social cohesion and inclusion. This is why effective partnerships help to reduce long-term pressure and costs on government, particularly in preventive and public health.

In a resolution passed by representatives of Victorian councils at the Municipal Association of Victoria State Council in October 2025 noted, “The Australian and Victorian Governments working in partnership with local government to deliver community-based preventive and public health programs will significantly improve population health outcomes, reduce long-term healthcare costs and relieve pressure on hospitals and emergency departments.”

Local-state partnerships are having tangible, successful outcomes on the ground in local communities.

In Victoria, the Loddon Campaspe Regional Partnership and the community came together to address poor health outcomes, establishing Healthy Loddon Campaspe with the support of the state government. A dedicated ‘health broker’ was appointed at each council to develop partnerships between councils and local stakeholders and influence policy with a health and wellbeing lens. Health brokers ensured health was central in policy development and decision-making at the local level.

In South Australia, Regional Climate Partnerships are a network of regional, cross-sectoral groups delivering practical action to strengthen the climate resilience of their communities, economies and environments. The partnerships have matured into the SA Climate Ready Alliance, a five-year state-wide program designed for climate readiness in regions, centred on coordination, capability-building and cost-effectiveness. It is funded by the Federal Government’s Disaster Ready Fund and supported by some state departments. The mission made it clear that partnerships between governments are greater than the sum of their parts.

Key ingredients for effective local-state partnership

CPD’s report, Better Together: Fostering local-state partnerships for healthier communities, outlines four types of effective and impactful local-state partnerships. Critically, the report suggests strategies for building partnerships that strengthen roles at each level of government.

• Establishing shared mandates and agreements – An important step of any partnership is agreeing and committing to shared objectives with mutual and distinct roles and responsibilities. This can be in the form of legislation (e.g. public health acts that mandate statutory roles and reporting), or Memorandums of Understanding (MOUs). Whether it is for planning instruments or for every major service system where local government is a funded delivery partner, federal and state governments should establish formalised agreements with the relevant local government peak body in each jurisdiction.
• Designing for local longevity – Partnership programs should have arrangements built for flexibility and plans for transition once program funding ends. This ensures programs meet the needs of a place, where the council and the community can have a sense of ownership and be supported in roles or activities that have the potential to be self-sustaining over time.
• Building local and state government capability – Partnerships can help to combine public health expertise, state-wide networks and resourcing with local understanding. This is especially important where there is staff turnover or need for capability-building. Intermediary institutions, such as local government associations and statutory agencies (i.e. VicHealth), are also essential in developing council capability through training, resources and accessible ongoing support.
• Centring local knowledge and expertise – Communities often know best about what they need and what will work in their community, so giving them greater ownership and control gets better results. Partnership should strengthen the leadership of councils and deepen a whole-of-council understanding of health and wellbeing across their strategic and operational capability.

Greater than the sum of its parts

No single government or department alone has the responsibility, resources or capability to address all the factors required to create healthy communities. It requires effort across all levels of government, the health sector and communities themselves.

Local government plays a critical role at almost every intersection of health and wellbeing. When councils deliver, the nation benefits.

From health and wellbeing programs, emergency management, service delivery and infrastructure, federal and state governments should continue to back councils – rather than withdraw – as they respond to the growing and diverse needs of communities and places.

Governments must address the structural sustainability issue with adequate funding for councils. It should also focus on how state and federal agencies can better partner with councils – relying on their expertise, delivery mechanisms and local position as a trusted institution in the communities they serve.

Cliff Eberly is a Policy Director at Centre for Policy Development. He has worked on people-centred government in Australia and internationally for over 20 years.

Esther Koh is Policy Adviser for the Just Transition and Wellbeing Government focus areas at the Centre for Policy Development.

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