Published by The Centre for Independent Studies (Sydney) 22 January 2009 (PDF)

http://www.cis.org.au/publications/issue-analysis/article/794-beyond-symbolism-finding-a-place-for-local-government-in-australias-constitution

Local governments could provide better services, like schools and fast development approvals if they received a higher proportion of tax revenue and a formal definition in the Constitution. There is a need for a strong and proactive local government that has more control over its purse strings and is more connected to the people it serves.
Interest has been renewed in the value of the third tier of government since the Rudd government promised to hold consultations on recognising local government in the Commonwealth Constitution.

Historically, Australian local governments have been weak. Their decision-making powers have been pushed further from local people and transferred to higher, more remote tiers of government. Local governments have the potential to deliver better local services to their communities.

For example, primary and secondary education could be assigned to the local level rather than one-size-fits-all state government education. Local school boards could administer schools, offering parents a greater role and scope for tailoring schooling solutions to the needs of local communities. Local governments play an important role in the planning and development of the built environment in their jurisdiction. Yet councils are constantly criticised for slow approval of development application. By giving a greater share of the tax revenue generated by development to the local rather than state government, councils would have the incentive to enable and speed up development.

For local governments to be able to bring government closer to the people directly affected by its decisions, the Prime Minister must include a clear definition of the role of local government in the Constitution. This would guarantee local government greater autonomy, assigning it certain tasks—but crucially, also giving it sufficient sources of revenue of its own to fulfil these tasks.