The 'Local Government has no powers' furphy
The claim
Back in May a tragic from Ipswich got his 15 minutes of fame by being photographed with his folders full of parking fines which he was refusing to pay (20 of them, totalling $1000) and claiming that "because local government is not recognised by the Australian constitution, the council has no right to issue the fines". He got reported quite extensively in the media - which is another issue again isn't it? Most reporters know so bl***y little about our system of government that they can't see that a claim like this is an obvious furphy - and it's sensational in a mild way at least, so they report it! But if you know even a little about our system of government, it is an obvious furphy.
The Grain of Truth
The fact that we have local governments in Australia as a 'third level' of government under the Commonwealth and State governments is indeed not mentioned in the Commonwealth Constitution. But so what? The Prime Minister is not mentioned. The flag and national anthem are not mentioned. Universities are not mentioned. Driving on the left of the road is not mentioned. Something doesn't have to be mentioned (or 'recognised', which makes it sound more important) in the Constitution to have a place in our legal system.
The Full Context
The immediate answer - local governments are empowered by State laws
Local government in each State is established by, or pursuant to, a State Act called, in every case, the Local Government Act. I say 'or pursuant to' because in many cases the Act does not directly specify what local governments shall exist and what their boundaries shall be; these are listed in proclamations or regulations authorised by the Act. But once the existence of a particular local government in certain boudnaries has been proclaimed, their powers are spelled out by the relevant LG Act. You can look up the relevant Act for your State on AustLII - find your State, then the Consolidated Acts link, then Acts beginning with "L", and a link to the LG Act will be on the page. Then read down the table of contents looking for references to local laws, or by-laws, and to control of traffic and/or parking.
Example: Queensland
Since the guy who hit the headlines was from Queensland, and I live in Queensland, let's see the answer in detail for Queensland. First, for the definitions of what local government covers what area, you have to see the Local Government (Areas) Regulation 2008. The Regulation (first made under an earlier Act but now authorised by section 8 of the Local Government Act 2009) defines the various local government areas, and then the Act gives local governments their power and imposes accountability requirements on them - rather like the Constitution does for the Commonwealth government.
As to parking fines in particular, stay with the Local Government Act 2009. The link just given will take you to the Table of Provisions and to see how easy it is to find relevant sections you can run your eye down that looking for section headings like "Power to make a local law" and "Control of roads". But if you want me to feed you the quick answer, here it is: section 28 of the Queensland Act gives local governments the power, in general, to make local laws (the things that used to be known as by-laws), and section 60 says that a local government has control of all roads in its local government areas and, within that section, paragraph 60(2)(e) gives them the specific power to:
(e) make a local law to regulate the use of roads, including-
(i) the movement of traffic on roads, subject to the Transport Operations (Road Use Management) Act 1995; and
(ii) the parking of vehicles on roads, subject to the Transport Operations (Road Use Management) Act 1995 (including the maximum time that a vehicle may be parked in a designated rest area that adjoins a road, for example)...
There are indeed limits to this power of local governments to fine us. In Queensland, sub-section 28(2) (which you've already seen if you clicked the section 28 link, above) provides that a local government must not make a local law that sets a penalty of more than 850 penalty units. [To find what a penalty unit is, you have to go to the Penalties and Sentences Act 1992 and there you'll find that section 5, and section 2A of the Regulation, provide that for most local governments it is currently $110 - so the maximum penalty under a local law is $93,500. Our mate from Ipswich should think himself lucky that no council has set parking fines anywhere near this maximum!]
For some reason (history, basically) the City of Brisbane is not set up under the Local Government Act, but has its own Act - the City of Brisbane Act 2010. Section 29 gives it the power to make local laws and section 66 gives it control of roads - they are almost identical to sections 28 and 60 of the LG Act quoted above. And, as I said above, for other States you can look it up on AustLII and you will find similar provisions in, I think, every case.
The higher-level answer - why can States give law-making power to local governments?
Despite the above, our querulous friend from Ipswich might still ask how it is that the States can create this third level of government and give it power to impose fines, when, as he says, it is not mentioned in the Commonwealth Constitution. The answer to this is in two parts - (i) history, and (ii) s 107 of the Constitution.
History - The Colonial Parliaments could establish local governments and give them power to make laws
The existence of local government was part of the English system that was brought to Australia by the colonists. In earlier centuries the system had been based on royal power - the King or Queen appointed Lord Lieutenants over counties and gave charters of incorporation to boroughs (towns) - but by the nineteenth century local government was regulated by Acts enacted by the Parliament, such as the the Municipal Corporations Act 1835 and the Local Government Act 1888, and it was assumed that it was normal for the councillors/aldermen to be elected - at least by the ratepayers if not by all the residents.
When the UK Parliament decided that the colonists could be trusted with self-government, it enacted the Australian Constitutions Act (No 1) 1842, sometimes cited as the New South Wales Constitution Act 1842. As well as providing for a semi-democratic legislature for New South Wales (which then included Victoria and Queensland), it expressly provided for the establishment of local government, and said that local governments could have the power to make bye laws and impose fines for breaches of bye laws. You can see the relevant sections on the transcript at the Founding Docs site (pages 9-12 of the transcript, 26-34 of the original). This is significant as the beginning of local government in Australia, but the details of the Act are not important because in 1855-56 all the southeastern colonies gained full self-government (Queensland followed in 1859) and their parliaments were given a general power to make law for the 'peace, welfare and good government' of the colonies. They all soon enacted acts like the Municipalities Act 1858 (NSW), which, like the modern Local Government Acts, established local governments and gave them power to make bye laws, or by-laws.
Although it might seem pretty obvious that a legislature really can't enact a code covering every little detail, and therefore a power to make laws for the peace, welfare and good government of a colony must include a law empowering someone to make regulations (or a council to make by-laws), it was not obvious to querulous litigants, or to all colonial courts, in the nineteenth century. For a decade a fashion developed in the colonies for people to challenge colonial laws that gave an executive officer, or a licensing board, the power to make delegated legislation. Counsel argued that the colonial parliaments, being delegates of the 'imperial' parliament, could not further delegate their power. Three of these cases went on appeal to the Privy Council, and each time the law was held to be valid.
In R v Burah (1878) an Indian Act had imposed special laws on an area subject to unrest, and the Lieutenant-Governor of Bengal had been given power to extend the area. Burah had been sentenced to death under the special laws, for a murder committed in the extended area. In Hodge v R (1883) an Ontario Act had authorised District Licensing Boards to make laws by resolution. Hodge had been convicted of a breach of a resolution (by allowing billiards to be played in his bar). In Powell v Apollo Candle Co Ltd (1885) a NSW Act had empowered the Governor (acting on advice of the Cabinet) to impose customs duty on a product if it seemed to be a substitute for another dutiable product. Duty had been imposed on stearine that the Candle Co had imported (presumably to make candles out of), at the same rate as the duty on candles.
In each case, the Council held that the law validly authorised the regulations and therefore the regulations were valid. In Burah their Lordships held that, although a parliament of a self-governing colony is subject to any express limits that the UK Parliament might choose to impose, within those limits it 'is not in any sense an agent or delegate of the Imperial Parliament, but has, and was intended to have, plenary powers of legislation, as large, and of the same nature, as those of [the UK] Parliament itself'. In Hodge they said it again. In Powell, presumably sighing under their noble breaths and wondering why Burah had not been cited in the New South Wales courts, they said it a third time. None of the cases involved a challenge to by-laws made by a local government, though the Toronto District Licensing Board was a pretty similar body. If there had been such a case the application of the principle would have been clear - if authorised by a Local Government or similar Act, properly interpreted, by-laws would be perfectly valid. This had been made quite clear by the time the colonies federated.
Federation - the State Parliaments inherit the power of the Colonial Parliaments
When the colonies federated, the main function of the new Constitution was to establish the new Commonwealth Government. However, it also turned the colonies into States. Section 106 preserved their constittuions as before and s 107 says:
107. Every power of the Parliament of a Colony which has become or becomes a State, shall, unless it is by this Constitution exclusively vested in the Parliament of the Commonwealth or withdrawn from the Parliament of the State, continue as at the establishment of the Commonwealth, or as at the admission or establishment of the State, as the case may be.
Actually, s 107 does not tell the whole story. The powers of the States are limited by more than the withdrawal of powers "exclusively vested in the Parliament of the Commonwealth or withdrawn from the Parliament of the State". The Constitution also imposed a few restrictions on their legislative powers, in order to turn Australia into a common market (see sections 92, 114 and 117) and provided that in case of a conflict between Commonwealth and State laws the Commonwealth law prevails (section 109). None of this, however, affects the power of the States to establish local governments and to give them powers to make by-laws (now called local laws in Queensland) and to impose penalties for breaches of them. They had the power to do that as colonies, s 107 continues that power, and nothing else in the Constitution takes it away from them.
Verdict
It's a 
. Local government does not need to be 'recognised' in the Constitution to validly exist and to have the power to impose fines; it is created by State law and the States have power - existing before the Constitution and continued by the Constitution - to make those laws. Since the States have given local governments the power to regulate traffic, parking, etc, and to impose penalties for breaches of such regulations, they are perfectly valid. Pay your parking fines (and rates, and other fines for breaches of by-laws or local laws) or face the consequences!
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This page was last updated on the 23rd July 2013.
