Last week, in collaboration with the Presidents of the State and Territory Associations, I wrote to all councils encouraging them to join the campaign to restore the indexation of the Financial Assistance Grants (FAGs). In particular, we asked every council to pass a resolution acknowledging the importance of the FAGs in delivering vital local services and infrastructure, and ensuring the positive impacts of these payments are publicly acknowledged.
The decision to freeze FAGs for three years will cost councils an estimated $925 million by 2017-18 and result in a permanent reduction in the FAGs base of around 13%. These grants are a vital part of the revenue base for councils and they are used to fund essential local services and infrastructure.
With the Federal Budget only a month away, it is important that the Federal Treasurer continues to hear how important it is to reverse the freeze on FAGs indexation and avoid councils having to reduce services or increase rates. Over the coming weeks, I am encouraging councils to talk with their Federal MPs to ensure that they have all the facts on what this freeze means for councils and communities in their electorate.
The impact of the freeze at the council level is clearly illustrated by looking at the experience of Cootamundra Shire Council in NSW. The Cootamundra Council will receive around $8 million in FAGs during the freeze period. However, this is around $1 million less than it would have received without the freeze. Council has reported that this equates to a loss of almost 43% of Council's roads renewal budget in 2017/18 and beyond. Council is working through how best to deal with such a significant funding shortfall with every realistic option being considered.
This is the real impact on the ground. Across Australia, the impacts will be substantial. ALGA will continue to advocate that the indexation of FAGs should be restored immediately. This is important for every Australian community and for the financial sustainability of our councils. We must build momentum for our campaign and ensure that the Federal Government and MPs are fully aware of the consequences for local communities.