A 2009 High Court case raised doubts about the Commonwealth's ability to make grants directly to local councils.
The federal government's failure to provide leadership on constitutional recognition of local government increases the financial uncertainty facing councils across the country.
Local Government Minister Simon Crean intends to refer the proposed referendum on constitutional recognition to a parliamentary committee.
However, the expert panel on Constitutional Recognition has already done the work required to show this referendum should go ahead.
The financial health of many councils could depend on constitutional recognition and the government should not back off. The Greens will not allow local government recognition to fall off the agenda.
Programs such as the Nation Building Roads to Recovery program, the Regional Development Australia Fund, the Regional and Local Community Infrastructure Program and the Low Carbon Communities all involve direct payments from the Commonwealth to local government.
Labor's committee plan leaves the government looking weak as it appears they are walking away from doing the work needed to make good on their commitment to hold a referendum.
Federal Labor needs to answer the question; how many committees are needed?