The Fair Share Report on cost shifting and local government financing, tabled in Federal Parliament in November 2003, makes the case that local government is under-resourced and is not achieving a fair share of taxation revenue. ALGA has further developed the case.
Local government has three major sources of revenue: municipal rates (38.7% of total local government revenue), user charges (30.5%), and grants and subsidies from other spheres of government (12%). Local government does not underestimate the importance of Commonwealth Financial Assistance Grants (FAGs) which accounts for more than 50% of council revenue in some rural and remote councils where own-source revenue raising capacity is severely limited.
This section outlines 'the good and bad' of Financial Assistance Grants, introduced by the Australian Government in 1974-75 as a way of distributing taxation revenue to local government.
A consequence of a strong national economy is a growth in demand for government services at all levels and demand for local government services has increased accordingly. To resolve the problems with the current arrangements, local government funding must increase in line with the growth in the economy. This revenue growth can only be achieved through the transfer to local government of a fair share of Commonwealth taxation revenue.