“End the freeze” and “restore indexation to Financial Assistance Grants (FAGs)” were the lines I took at a recent meeting with the Federal Local Government Minister, Senator the Hon Fiona Nash, at Parliament House in Canberra.
I explained to the Minister that the freeze of the indexation to FAGs is estimated to result in a permanent reduction in the grants base by about 13 per cent. This means that even if indexation is restored in 2017-18, the gap will continue to widen and it is estimated that FAGs will be about $334 million less in 2018-19 and almost $350 million less in 2019-20.
Also, according to the Government’s own estimates, the FAGs indexation freeze means councils nationwide will miss out on $925 million (almost $1 billion) over the four years to 30 June 2018.
I highlighted to Minister Nash that FAGs are untied funding and it is this untied funding that is critical to local government. Each council has different pressures, commitments and priorities and therefore they need the flexibility to fund the services that are most needed by their communities.
As a result of the FAGs indexation freeze enforced in the 2014 Federal budget, the amount of FAGs councils receive has decreased each year of the freeze, making it harder to maintain community services and infrastructure. Over the past three years of the freeze, many councils had to re-evaluate what services and infrastructure they could continue to provide to adjust to the reduced revenue levels with some forced to cut services in areas such as childcare, bike paths, road works and landfill.
I sought Minister Nash’s support for ALGA’s call to the Australian Government to honour its commitment to restore the indexation of Financial Assistance Grants in the 2017-18 budget as promised.
While the Minister could not provide any firm commitments before the budget in May, I’m sure that she understands local government’s position on this important issue.
ALGA has been campaigning hard to see indexation restored in this year’s Federal budget and I’d like to thank those councils that have supported the campaign so far.
I would also like to extend my sincere gratitude to the Federal members that have been able to raise this important issue in the Senate and the House of Representatives over the past few weeks including Ms Cathy McGowan AO, MP, Mr Steve Georganas MP, Ms Justine Keay MP and the Shadow Minister for Local Government, Mr Stephen Jones MP.
I also welcome the reassurance from Senator the Hon James McGrath to the Senate of the Government’s indication in the 2016 budget to restore the indexation of FAGs.
Mayor David O’Loughlin
ALGA President