The referendum to recognise local government remains in a coma, but councils which paid into the Australian Local Government Association's (ALGA) bid for the vote will now be paid back.

The Federal Government has agreed to return the money put up by councils around the country to push for constitutional recognition of local governments.

The cause was taken up when Julia Gillard was Prime Minister. Ms Gillard set a date for the referendum, which was then suspended by the returned Kevin Rudd, and recently seems to have been scrapped altogether.

The CEO of South Australia’s LGA said it was good to see the money returned, but having the referendum back would be better.

“Well, we'll certainly continue to have discussions with the new Federal Government about the referendum,” SALGA’s Wendy Campana said.

“They've indicated to us at this point in time they won't be proceeding with it but we still think it's really important to clarify in the Australian Constitution that local government can be funded directly, because we don't want any more High Court challenges.

“We're not sure, for example, where the Coalition Government will go on the question of Regional Development Australia boards and their continuation of funding that's been coming from the Federal Government in the past.

“So still on our agenda but we'll work with the new Government as they get their head around what they want to do on the issue,” Ms Campana said.