The range and scope of local government functions has expanded over recent decades. Despite these increasing demands, local government's sources of revenue have remained unchanged, resulting in a significant increase in the financial pressures faced by local councils.
Municipal rates are the sole source of taxation revenue for local government and factors for $7.7 billion or 37.8% of total revenue. Unlike consumption or income tax, municipal rates (which are calculated using land values) are a slow growth tax. Constraints by other spheres of government, such as rate pegging in New South Wales, exacerbate the situation.
The state and the Northern Territory governments offer a variety of grants to local government for specific purposes and services. Determining the amount of funding provided is difficult as not all states provide information in their budget papers. Further, the only consolidated data available is that provided by the Australian Bureau of Statistics.