Financial Sustainability

The ALGA 2017-20 Strategic Plan identifies work on strengthening local government financial sustainability as a strategic priority.

Local government (councils) is the third tier of government in the Australian system of government. Councils are primarily responsible for providing a wide range of critical local area services including planning, libraries and waste management and for infrastructure provision (e.g. roads and footpaths, parks, sporting grounds and swimming pools) required by the local community.

Local government nationally employs about 187,000 Australians (around 10 per cent of the total public sector). It also owns and manages non-financial assets with an estimated written down value of $408 billion (2015-16), raises around 3.6 per cent of Australia’s total taxation revenue per annum and has an annual operational expenditure of around $35 billion (2015-16), just under 6 per cent of total public sector spending.

Nationally, local government derives nearly 90 per cent of its revenue from its own sources

Nationally, local government derives nearly 90 per cent of its revenue from its own sources (including rates and services charges), compared to around 50 per cent for state governments. Grants from other levels of government make up only 10 per cent of local government’s total revenue, however these grants are particularly important in areas with a low rate base, and/or high growth rate, and rapidly expanding service and infrastructure needs.

Local government’s expenditure is directed towards the provision of local services across the nation. These services include: housing and community amenities, transport and communications, recreation and culture and general public services. These services are critical to the productivity, wellbeing and liveability of local communities and cumulatively of the nation.

ALGA’S policy priorities to strengthen local government financial sustainability include:

  1. Secure annual Commonwealth funding for local government equal to at least 1% of Commonwealth Taxation Revenue.
  2. Oppose revenue constraints such as rate capping and cost shifting.
  3. Encourage councils to acknowledge Financial Assistance Grants as a Commonwealth untied grant to local government.
  4. Strengthen local government’s credentials as a trusted partner for tied Commonwealth grants.