MORE funding for roads, but less for local government’s core funding because of the ongoing freeze in the indexation of the Financial Assistance Grants.
When it comes to the Federal Budget, delivered last Tuesday by Federal Treasurer Joe Hockey, it’s a matter of swings and roundabouts.
The President of the Australian Local Government Association (ALGA), Mayor Troy Pickard, welcomed the announcement that the Australian Government will meet its commitment to double the funding for the Roads to Recovery program and provide additional Black Spots funding in 2015-16.
An extra $350 million in Roads to Recovery funding will be provided to councils in the coming year and Black Spots funding will be increased from $60 million to $160 million in both 2015-16 and 2016-17.
However, the extra funding is provided against the backdrop of a continuing decline in local government’s core funding because of the ongoing freeze in the indexation of the Financial Assistance Grants.
The Budget indicates that the Government will restore the indexation of the grants in 2017-18, but the freeze in indexation has already reduced grants to councils by an estimated $96 million in 2014-15 and an additional $200 million will be foregone in the coming year. A further $308 million will be lost from the value of the grants in 2016-17, the final year of the freeze. The Government’s own figures estimate that a total of $925 million will be lost over the Budget out years, leading to a permanent reduction of around 13 per cent to the grants into the future.
”These grants are absolutely essential to local communities as they allow councils to provide a reasonable level of service and infrastructure to local residents. The permanent loss of a substantial proportion of the grants as a result of the continued freeze on indexation will be felt in all communities,” said Mayor Pickard.
ALGA has called for an end to the freeze on the indexation of Financial Assistance Grants as soon as possible.