The ALGA has responded to the 2024-25 Federal Budget, saying that the government has broken its pre-election promise to provide ‘fair increases’ to Financial Assistance Grants for councils.
ALGA President, Linda Scott, said that these untied federal grants are vital to supporting local government to deliver more affordable housing, and cost-of-living relief through access to free and low-cost services.
“Local governments welcome the Federal Parliamentary inquiry into our financial sustainability over the long term, however councils and our communities need the immediate support that we were promised,” Cr Scott said.
“In the lead up to the 2022 election, the Federal Government committed to providing fair increases to Financial Assistance Grants to councils. Tonight’s Budget was their last chance to deliver during their current term.
“Councils will welcome a $155 million increase in Financial Assistance Grants this year. However, this increase is the result of the legislated indexation formula, and far below the fair increases promised by the government.
“This year’s Budget will be incredibly disappointing to many councils and communities that have been waiting for the Government to deliver on its fair funding promise over the past two years.
“Restoring Financial Assistance Grants to at least one per cent of federal taxation revenue is the key to unlocking the productivity of our cities, towns and regions, and building more liveable and vibrant communities.”
Cr Scott also welcomed the intent of new housing and active transport funding programs, and the ongoing Disaster Ready Fund, but highlighted that poor program execution would limit their success.
“The $1 billion to support new housing enabling infrastructure will be provided through State and Territory Governments with no guarantee it will flow to councils dealing with housing pressures.
“Locking local governments out of federal funding to enable housing infrastructure will be a barrier to achieving the Government’s ambitious national targets.
“Councils need upfront support to upgrade our stormwater and sewerage infrastructure, or we can’t unlock the additional homes our country needs.
“The government aims to build 1.2 million more homes, including 40,000 social and affordable homes and new remote homes in the Northern Territory. The Treasurer has acknowledged that we all must work together but it’s disappointing there is no new support in this Budget to help councils play our part.
“While councils celebrate the aim of the government’s new $100 million National Active Transport Fund, it doesn’t make sense to exclude councils from applying when we build and maintain thousands of kilometres of footpaths and cycleways.”
However, Cr Scott said, councils will be delighted to see the government follow through on its November 2023 commitment to significantly increase road funding to local government.
“Councils maintain 75 per cent of Australia’s local roads, and independent research from the Grattan Institute last year highlighted a $1 billion per year maintenance funding deficit.
“This year’s Budget includes an extra $150 million for the Roads to Recovery program, as well as a commitment to increase this funding to $1 billion per year over the forward estimates.
“With increased federal road funding, we can significantly improve the safety and effectiveness of the roads Australians use every day, increasing our nation’s productivity while addressing our unacceptable national road toll.”
Local Government Association of Queensland (LGAQ) CEO, Alison Smith, said that the Federal Government promised ‘fair funding’ two years ago but councils are still waiting.
“For councils, ‘fair funding’ would be restoring the Financial Assistance Grants once again to at least one per cent of Federal taxation revenue,” Ms Smith said.
“While Financial Assistance Grants to Queensland councils will increase from $653.1 million in 2024/25 to $739.2 million in 2027/28, they remain flat at just over 0.5 per cent, or half of what they need to be to adequately support local communities.
“There is no more critical time to properly fund councils than during the current cost of living crisis.
“This is a disappointing Budget for the sector that so many communities rely on, and never more so than when times get tough for households.
“Every day, councils are providing the parks, libraries, playgrounds, community events and cohesion their residents need more than ever when household budgets are feeling the strain.”
Ms Smith said that the LGAQ’s cost shifting research has found councils – and their ratepayers – are being forced to cover a $360 million deficit every year, up 378 per cent since LGAQ last tallied up the cost shifting burden two decades ago.
“Cost shifting from other levels of government have loaded councils with more and more services to keep their communities going but without the funding to match.
“And while we also welcome the federal inquiry into the sustainability of local government, councils need immediate funding action on Financial Assistance Grants.”
Local Government NSW President, Darriea Turley, said that the federal budget had little in the way of good news for local government, with the Federal Government still yet to meet its pre-election commitment for fair increases to Financial Assistance Grants.
“NSW councils’ share of Financial Assistance Grants will surpass $1 billion for the first time in 2024-25, but this just reflects increases based on the legislated formula for indexation rather than meaningful increases in the quantum of the grants,” Ms Turley said.
“Financial Assistance Grants are essential for the financial sustainability of our sector and allow councils to build and maintain the infrastructure and services our communities expect and deserve. LGNSW will continue to work with ALGA in calling for a fairer deal for councils.
“The State Government will be similarly disappointed, with the federal budget revealing that in 2024-25 New South Wales is set to receive $1.9 billion less than previously forecast in GST revenue. We will see the impacts of this reflected in the New South Wales State Budget on 18 June.
“The Federal Government has also announced a continuation of the National Housing and Homelessness Agreement, with indexation (amounting to $1.86 billion a year). However, it is disappointing there is no new funding for public and social housing, despite the critical need in this area.
“The Federal Government has also announced $1 billion for states and territories to support infrastructure to enable more housing. While welcome, excluding councils from this funding hampers the ability of councils to contribute to achieving Housing Accord targets.
“One bright point for councils is seeing the progressive increase in funding for Roads to Recovery reflected in the budget. For 2024-25, funding for this program will be $649.4 million nationally, with $181 million for New South Wales councils.”
Image: Heath Doman/shutterstock.com
