Financing local government
ALGA’s analysis of key points in the 2016-17 Federal Budget from a local government perspective.
Financial Assistance Grants
- The 2016-17 Budget maintains the system of payments to support local government, through Financial Assistance Grants (FAGs).
- After strong advocacy to the Federal Government the Budget papers indicated that the freeze on indexation, that will cost councils $925 million by the end of financial year 2017-18, is expected to end, with indexation to be restored in 2017-18.
- In the 2016-17 year, the Australian Government will allocate $2.29 billion in FAGs for local government services to the community.
- FAGs continue to comprise two components: general purpose assistance grants; and untied local roads grants.
Table 1: Commonwealth funding for local government 2016-17 ($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 2015-16 to 2019-20 ($m)
|General Purpose Assistance||792.5||1,585.3||1,649.5||1,714||1,783.9|
|Untied Local Road Funding||351.7||703.4||731.9||760.5||791.6|
|TOTAL FINANCIAL ASSISTANCE||1,144.2||2,288.7||2,381.4||2,474.5||2,575.4|
FAGs are increased annually, based on an escalation factor determined by the Treasurer with reference to population growth and the consumer price index. Budget Paper 3 indicates 2016-17 will be the final year that the indexation of Financial Assistance Grants will be frozen.
Table 3: Financial Assistance Grants to local government by jurisdiction 2016-17 ($m)
|General Purpose Assistance||508.1||396.8||318.3||172.7||112.8||34.3||26.1||16.2||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||712.2||541.8||450.1||280.0|| 151.5||71.6||48.6||33.0||2,288.7|