The current funding arrangements for local government are no longer fit for purpose. The decline in core federal funding to local government has reduced the capacity of councils to develop and maintain the key services and infrastructure within their communities, which fuels the risk of reducing standards of living in remote Indigenous communities and across the nation.
The Financial Assistance Grant scheme (FAGs) is practically the life blood of small Indigenous Council’s that have no rate base or only minimal rateable land. The Torres Strait Island Regional Council is unique in comparison to other local government organisations; servicing a population base of 5,000 people, spread across 42,000 square kilometres of ocean and 15 individual island communities, each with their own unique characteristics and service requirements. All of which is managed by a total asset base of $1.6b (gross), with an annualised depreciation of $47.1m and a total operating revenue of $84m.
- Repair funding assistance to local government by restoring the quantum of Financial Assistance Grants to at least 1% of Commonwealth taxation revenue.
- Establish a public enquiry into current funding streams and levels provided to Indigenous Councils, and the cost associated with local government service provision in regional and remote footprints, in comparison with their mainland counterparts.
- Urgent assistance and collaboration with Council following the impact of unsustainable and increased insurance costs, driven in part by a large asset portfolio post-amalgamation.
The Commonwealth collects around 80% of taxation; however, responsibility for service and infrastructure delivery falls to states, territories and local governments.
Nationally, local government spent $34b in 2016. The Commonwealth provides around $2.3b in FAGs to local government or just under 7% of annual expenditure.
The Commonwealth Government’s funding to local government through FAGs is critically important. Untied in the hands of councils, the FAGs enable councils to provide a mix of services and infrastructure appropriate to their local circumstances and maintain the wellbeing of their communities. They help equalise the level of services across local governments nationally;
- particularly in rural, regional and remote areas
- and they help fund the growth in demand for local government services in line with population growth.
FAGs were equal to around 1 per cent of Commonwealth taxation revenue in 1996. However, despite an annual growth rate in Australia’s Gross Domestic Product of an average 3.47% from 1960 until 2017, FAGs have declined by around 43% in relative terms over the past 20 years, and now amount to approximately 0.55% (2018) of Commonwealth tax revenue.
Additional investment through local government is essential to help maintain the living standards of all Australians by fostering the equitable provision of local government services and infrastructure and maintaining local economic growth.