$1 billion ‘opportunity’ to fix Australia’s local roads and boost productivity

Federal funding to Australia’s 537 local governments should be increased by $1 billion every year to address the critical state of the nation’s local road infrastructure, according to a new independent Grattan Institute report.

ALGA President Councillor Linda Scott said the Federal Government’s Infrastructure Investment Program (IIP) review provided an ideal opportunity to address the Grattan Institute’s recommendations and support councils to deliver safer and more productive roads.

“With the Government looking at our future infrastructure investment pipeline and projects, it’s important this review also considers how we maintain our existing assets,” Cr Scott said.

“Australian councils manage almost 680,000km of local roads while collecting less than four percent of taxation.

“Local roads are a critical part of our national road network, so we need an urgent national funding solution.”

The Potholes and pitfalls: how to fix local roads report recommends increasing federal Financial Assistance Grants to councils by $600 million per year, as well as Roads to Recovery funding by $400 million per year, with both federal programs to be indexed annually.

Cr Scott said: “We have consistently advocated for Financial Assistance Grants to be restored to at least one percent of Commonwealth taxation revenue, and for an increase in Roads to Recovery funding.

“This new Grattan Institute research shows federal funding programs aren’t keeping up with the soaring costs of constructing and maintaining roads.

“More funding for road maintenance will also mean safer roads and will help reduce our unacceptably high national road toll, especially in rural and regional areas.”

Cr Scott said communities should not have to wait for funding to address this important national issue.

“Without urgent funding, the state of our roads will continue to decline and only get more expensive to fix.”

The Grattan Institute’s report also highlighted the impact of increased road use – by passenger and freight vehicles – on Australian roads, recommending a $200 million per year fund to help assess and upgrade local roads identified as key freight routes.


  • Councils are responsible for more than three quarters (77 per cent) of Australia’s roads by length, equating to about 678,000km.
  • ALGA’s 2021 National State of the Assets report found eight per cent of sealed local government roads and 14 per cent of unsealed local government roads in Australia were in poor condition, function and capacity.

Roads to Recovery Program

  • Roads to Recovery funding is provided to local governments to support the construction and maintenance of the nation’s local roads.
  • In the 2023-24 Federal Budget, $484 million was allocated to the Roads to Recovery program.
  • ALGA’s 2023-24 Pre-Federal Budget Submission advocated for an increase in Roads to Recovery funding to $800 million per year.

Financial Assistance Grants

  • In the last Federal Budget, Australia’s councils received a total of $3.1 billion in Financial Assistance Grants.
  • The value of Financial Assistance Grants as a percentage of Commonwealth taxation revenue has declined from 1 percent in 1996 to 0.5% today.
  • Financial Assistance Grants are indexed annually based on increases to population and CPI, but this indexation was frozen for three years from 2014-15.
  • ALGA’s 2023-24 Pre-Federal Budget Submission called for Financial Assistance Grants to councils to be restored to at least 1 percent of Commonwealth taxation revenue.