This week, councils across Australia received the third instalment of Financial Assistance Grants (FAGs) for the current financial year.
FAGs are a vital part of the revenue base of all councils, with local governments this year receiving $2.3 billion from the Australian Government to provide funding for local infrastructure and services.
FAGs payments are welcomed by all councils, as they are used to help fund essential local services and infrastructure – from local roads, bridges, swimming pools and parks to community halls and services to the young and elderly, local community and sporting groups.
The untied grant funds are an important direct funding link between the Commonwealth and local community. A link that must be preserved, particularly in light of the current White Paper Processes on the Reform of the Federation and Taxation.
It is also important that the level of funding provided to local government is adequate to meet local needs. The decision in the 2014 Federal Budget to freeze indexation of FAGs means that all councils are working with less funding from the Commonwealth this year, and for the next two years.
The decision to freeze indexation will cost councils an estimated $925 million by 2017-18.
FAGs funding is not keeping pace with the growing demand for local services and infrastructure, and the freeze will worsen this situation.
The ALGA Board discussed at length at its strategic meeting this week the impact of the FAGs decision and the ongoing advocacy campaign to highlight the impact of this decision to the Federal Government.
It is important FAGs funding is acknowledged. As councils we profile and highlight funds received from the Commonwealth for Roads to Recovery and BlackSpot funding, for example, but say much less about FAGs, despite their important role in council budgets, particularly those in rural, regional and remote councils.
The funds are used for a variety of purposes that help our councils ensure a reasonable level of service and infrastructure in our communities, making it hard to pinpoint exact projects. It may be a whole swag of projects or facilities or services having funding directed to them, funding that is made possible because of the FAGs grants process. Likewise, we need to think about the impact on these services with less Commonwealth funds.
The ALGA Board is keen to work with the Federal Government to ensure FAGs are maintained and indexation restored. This position is one of the key issues raised in ALGA’s 2015-16 Budget submission.
Mayor Troy Pickard