Financing local government
ALGA’s analysis of key points in the 2015-16 Federal Budget from a local government perspective.
Financial Assistance Grants
- The 2015-16Budget maintains the system of payments to support local government, through Financial Assistance Grants (FAGs)
- In the 2015-16 financialyear, the Australian Government will allocate $2,289 billion in FAGs for local government services to the community. The freeze on indexation announced in the 2014-15 Budget remains in place, the impact of this freeze was estimated last year to be $925 million in lost FAGs until 2017-18. In 2017-18, indexation is projected to be re-instated, by which time, the annual funding base is estimated to be 13% lower than it should have been, without the impact of the freeze.
- FAGs continue to comprise two components: general purpose assistance grants; and untied local roads grants.
Table 1: Commonwealth funding for local government 2015-16 ($m)
|General Purpose Assistance||1,585.3|
|Untied Local Road Funding||703.4|
|TOTAL LOCAL GOVERNMENT FUNDING|| 2,288.7|
Table 2: Total Financial Assistance Grants to local government 2014-15 to 2018-19 ($m)
|General Purpose Assistance||1,585.3||1,585.3||1,585.3||1,652.3||1,722.9|
|Untied Local Road Funding||703.4||703.4||703.4||733.2||764.5|
|TOTAL FINANCIAL ASSISTANCE||2,288.7||2,288.7||2,288.7||2,385.5|| 2,487.4|
FAGs are increased annually, however, the indexation freeze applied by the Government in the 2014-15 Budget remains until 2017-18, by which time, councils are estimated to have forgone $925 million in projected FAGs payments.
Table 3: Financial Assistance Grants to local government by jurisdiction 2015-16 ($m)
|General Purpose Assistance||507.2||394.6||318.7||174.5||113.3||34.5||26.0||16.5||1,585.3|
|Untied Local Road Funding||204.1||145.0||131.8||107.6||38.7||37.3||22.6||16.5||703.4|
|TOTAL FINANCIAL ASSISTANCE||711.3||539.6||450.5||282.0|| 151.1||71.8||48.6||33.0||2,288.7|