The Australian Local Government Association has welcomed serious discussion about Australia's three levels of Government.

ALGA president Felicity-Ann Lewis says the lack of Local Government recognition in the Constitution has major implications for future funding, and could even see some councils simply give up and hand control to the States.

She said the looming freeze on Federal Financial Assistance Grants could be the touchpaper for a crisis in councils.

Council are encouraging to take hold of the destiny by speaking out on issues ahead of the Federal Government’s White Paper on the Reform of the Federation.

“We only have three per cent of the taxes that are collected in the nation in Local Government and we have about 80 per cent of the infrastructure,” the ALGA president told reporters in Tamworth this week.

“So you can see there's quite a significant imbalance there, of what our responsibilities are as far as providing infrastructure for the nation compared to the amount of money that we have access to from our property base taxes and the small amount we can recover from our user pays charges.”

“As a nation, we have to bite the bullet and say that our Constitution has served us well, but look let’s try and be pragmatic, look into the future.

“If we were starting again today what would be some of the things we need to do and have that conversation over a period of time with our community, so if there are major things in the constitution that we want the country to accept needs to change, that we do that,” Ms Lewis said.