This week the ALGA Board met to discuss a range of issues facing local government, chief amongst them was the campaign aimed at ending the freeze to the indexation of Financial Assistance Grants (FAGs).
The decision to freeze the indexation of FAGs announced by the Commonwealth in the May 2014 Budget will result in councils working with less funding this year and into the future.
There are around 560 councils in Australia that employ about 190,000 people and have aggregate expenditure in excess of $32 billion per annum. Local government is critically important to Australia and Australia's communities.
The Government's three-year freeze to the indexation of FAGs will cost councils an estimated $925 million by 2017-18 but will also result in a permanent reduction in the FAGs base by around 13%.
FAGs are a vital part of the revenue base of all councils and they are used to help fund essential local services and infrastructure. Councils use this funding for roads, libraries, parks and community facilities. They use it to run community arts programs, support planning processes and provide a range of services to their communities. This funding is critical to our local communities, critical to all Australian communities and it is imperative that the Federal Government restore the indexation.
With the Government’s decision to freeze indexation and deprive councils of a cumulative total of $925 million, the value of the grants received by local government will be $321m less than it would otherwise have been in 2017-18. By the following year, in 2018-19, the base will be around $335 million less. By the year after that it will be about $350 million less. That is the entire value of the Roads to Recovery Program (R2R).
This cut makes our job, as Elected Members representing the interests of local communities, more difficult. We have fought to keep the R2R program but we now face the prospect of losing the full value of the program from our core funding. We must stand firm to ensure the indexation freeze is reversed.
This week I took up this issue during meetings with the Deputy Prime Minister and a number of other Ministers and federal politicians. Given the importance of this issue, the ALGA Board has charged the ALGA Secretariat to work with the State and Territory Associations to implement a campaign involving every council to help us ensure the restoration of FAGs indexation. We will be writing to all councils shortly to seek your active participation in the campaign.
Mayor Troy Pickard