ALGA analysis of the 2016-17 Federal Budget

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

Table 2: Total Financial Assistance Grants to local government 2015-16 to 2019-20 ($m)

General Purpose Assistance 792.51,585.31,649.51,7141,783.9
Untied Local Road Funding 351.7703.4731.9760.5791.6
TOTAL FINANCIAL ASSISTANCE1,144.22,288.72,381.42,474.52,575.4

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 508.1396.8318.3172.7112.834.326.116.21,585.3
Untied Local Road Funding 204.1145.0131.8107.638.737.322.616.5703.4
TOTAL FINANCIAL ASSISTANCE712.2541.8450.1280.0 151.5