Local government Financial Sustainability Priority
The ALGA 2020-23 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 194,000 Australians (around 10 percent of the total public sector). It also owns and manages non-financial assets with an estimated written down value of $457 billion (2018-19), raises around 3.4 percent of Australia’s total taxation revenue per annum and has an annual operational expenditure of around $39 billion (2018-19), just under 6 percent of total public sector spending.
Nationally, local government derives nearly 90 percent of its revenue from its own sources (including rates and services charges), compared to around 50 percent for state governments. Grants from other levels of government make up just over 10 percent 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, well-being, and liveability of local communities and cumulatively of the nation.
ALGA is advocating that local government’s share of tax revenue increases significantly to meet increasing demands on local infrastructure and services and ultimately that it reaches a level of at least 1 percent of Commonwealth taxation revenue.
ALGA’s policy priorities are to:
- Preserve Financial Assistance Grants as the major source of Federal Funding to Local Government.
- Strengthen the business case to support calls to restore FAGs to 1 percent.
- Advocate to restore the FAGs funding lost in the 2014-15 indexation freeze as the first phase in restoring FAGs funding levels.
- Encourage councils to acknowledge the value of Financial Assistance Grants.
- Support state and territory associations to engage councils in a united campaign to achieve 1 percent for FAGs.
- Increase the Australian Government’s recognition of Local Government as a trusted partner
(Extract from ALGA Website)