No new funding for councils in Federal Budget

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Australia’s councils have been let down with no new local government programs announced in tonight’s 2025-26 Federal Budget.

ALGA President Mayor Matt Burnett said a recent Parliamentary inquiry report confirmed many councils were at breaking point, after years of delivering more vital services to communities with less funding.

Mayor Burnett said: “Once again, our councils – which are the most efficient level of government – and communities have been overlooked in the Budget with no new programs to address our financial sustainability emergency.

“The current funding model for local government is badly broken, and we need significant long-term support to deliver local, place-based solutions to national challenges, including affordable housing, community infrastructure, road safety and natural disasters.

“Increased funding to councils supports the delivery of free and low-cost facilities like local parks, events and libraries – which benefit our communities in this cost-of-living crisis.”

Ahead of this year’s election, ALGA has outlined five key funding priorities to provide a significant uplift to council budgets, including:

  • $1.1 billion per year for enabling infrastructure to unlock housing supply,
  • $500 million per year for community infrastructure,
  • $600 million per year for safer local roads,
  • $900 million per year for increased local government emergency management capability and capacity, and
  • $400 million per year for climate adaptation.

Mayor Burnett said councils are calling on all parties and candidates to put our communities first and provide significantly increased funding to local government.

“We want these new programs distributed across all councils, on a long-term, formula-basis, similar to federal Financial Assistance Grants and Roads to Recovery funding, which has been successfully delivered for many years,” Mayor Burnett said.

“This would provide a much-needed boost to the sustainability of this sector, and importantly ensure every community benefits.”

Mayor Burnett said councils are happy to see the Government following through on its 2023 pledge to gradually increase funding for local road maintenance.

“Tonight, we welcome an extra $172 million for the Roads to Recovery program in this year’s Budget, as the next step in their commitment to increase funding to $1 billion per year over the forward estimates.

“This will help to significantly improve the safety and effectiveness of the roads Australians use every day.

“Councils maintain more than 75 per cent of Australia’s local roads, and it’s fantastic to see the Government recognising the importance of our local infrastructure, and the key role it plays in building more resilient and connected communities.

“We also welcome an extra $114 million in the Safer Local Roads and Infrastructure Program to enable councils play an important role in supporting the efficient movement of freight around our nation.

“We are fully committed to partnering with the Commonwealth, and state and territory governments, to achieve national priorities through effective local solutions.

“But we can’t achieve this without greater support and sustainable funding to help build more connected, liveable and productive communities.”

Background

  • In 2025-26, local governments will receive $3.45 billion in federal Financial Assistance Grants, which is approximately 0.51 per cent of Commonwealth taxation revenue. Councils welcome a $144 million increase in Financial Assistance Grants this year, as a result of annual indexation applied to the funding.
  • Financial Assistance Grants have been a mainstay of local government funding since 1974.
  • The annual grant is paid to local governments via state or territory grants commissions, according to an agreed formula set by the Federal Government.
  • The last time FA Grants equalled one per cent of Commonwealth taxation revenue was back in 1996.
  • FA Grants are untied, meaning local governments can use this federal funding to address local issues, projects and key priorities.

Fact sheets

Posted 25 March, 2025