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Local Government Financing
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The ALGA 2014-17 Strategic Plan identifies work on improving local government funding as a strategic priority.


Local government is the third sphere of government in the Australian system of government. Local government (councils) is primary responsible for providing good governance of the local municipality including the provision of local municipal services and infrastructure required by the local community. 

Local government nationally employs just under 189,000 Australians (around 10 per cent of the total public sector), owns and manages non-financial assets with an estimated written down value of $354 billion (2013-14), raises around 3.4 per cent of Australia’s total taxation revenue per annum and has an annual operational expenditure of around $33 billion (2013-14), just under 6 per cent of total public sector spending.

Nationally, local government derives nearly 90 per cent of its revenue from its own sources (including rates and services charges), compared to around 50 per cent for state governments. Grants from other levels of government make up only 10 per cent of local government’s total revenue, however these grants are particularly important in areas with a low rate base, and/or high growth rate, and rapidly expanding service and infrastructure needs.

Local government’s expenditure is directed towards the provision of local services across the nation. These services include: housing and community amenities, transport and communications, recreation and culture and general public services.

ALGA’S policy priorities include:

  1. Ending the temporary freeze on the Indexation of Financial Assistance Grants (FAGs).
  2. Calling for the restoration of the FAGs funding to a level equivalent to at least 1% of Commonwealth Taxation Revenue.
  3. Ensuring that the indexation methodology of FAGs reflects the real cost pressures on councils.
  4. A renegotiated Intergovernmental Agreement to prevent cost-shifting of Commonwealth and state government responsibilities onto already resource-strained local councils.
  5. A thorough review of FAGs.

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