Australia’s peak local government body has described the 2026-27 Federal Budget as a positive step for housing infrastructure, while warning more support is needed to address mounting financial pressures on councils nationwide.
The Australian Local Government Association (ALGA) said the Budget recognises the role councils play in delivering housing growth and local infrastructure, but falls short on long-term funding certainty for essential services and community assets.
ALGA President, Mayor Matt Burnett, said councils welcomed the Federal Government’s $2 billion commitment over four years for housing-enabling infrastructure to support the delivery of 65,000 new homes.
“This investment recognises that councils are critical partners in addressing the housing crisis,” Burnett said.
“Roads, drainage, water connections and community infrastructure are the building blocks that turn developments into liveable communities.”
Burnett said the funding would help councils support population growth, but broader financial sustainability concerns remained unresolved.
“Councils are on the frontline of delivering local roads, community services, climate resilience and economic productivity, but they need secure and predictable funding to continue meeting those expectations,” he said.
ALGA noted that Financial Assistance Grants had declined from 0.51 per cent to 0.49 per cent of Commonwealth taxation revenue in the Budget, despite councils continuing to face rising construction, fuel and service delivery costs.
The association welcomed the Federal Government’s decision to bring forward 80 per cent of councils’ 2026-27 Financial Assistance Grant payments into the current financial year, saying it would provide greater certainty for local governments.
Mayor Burnett said councils also welcomed the ongoing Federal inquiry into local government funding and fiscal sustainability.
“Councils need fair, sustainable and untied funding that allows them to respond to the priorities their communities need most,” he said.
The association said the Budget failed to provide sufficient long-term investment for disaster resilience and emergency management, despite councils facing increasing pressure from more frequent and severe natural disasters.
“Communities are dealing with disaster after disaster, while councils are already under significant financial strain,” Burnett said.
ALGA also welcomed the Federal Government’s continued commitment to increase the Roads to Recovery Program to $1 billion annually, but said a significant structural funding gap remained for councils responsible for maintaining almost 80 per cent of Australia’s road network.
“Councils maintain the roads that support local communities and freight movements across the country, but local governments simply do not have the revenue base to maintain and upgrade them at the level required,” Burnett said.
The association also raised concerns about competitive grant funding models for community infrastructure, arguing they create uncertainty and increase administrative pressure for councils trying to deliver essential local projects.
“Councils lead the delivery of parks, local roads, shared spaces and community facilities Australians rely on every day,” Burnett said.
“Local government needs predictable funding streams that recognise the essential role councils play in building stronger and more connected communities.”
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