Council Calls For Changes To Unfair Financial Assistance Grants

Gunnedah Shire Council

Gunnedah Shire Council is calling on both the Federal and State governments to address Financial Assistance Grants methodology that is leading to regional and rural councils missing out on desperately needed roads funding.

In a Mayoral Minute to the June Council Meeting, Gunnedah Shire Mayor Jamie Chaffey told Councillors city councils were receiving four to five times more funding per kilometre of road than country councils.

“Rural and regional councils have smaller populations, but a much larger area,” Cr Chaffey said.

“In Gunnedah Shire, we have more than 1,400km of road network to maintain and, like other rural and regional councils, we have a smaller rate base and a reduced capacity to raise revenue. We desperately need assistance to keep our roads maintained and safe.

“Financial Assistance Grants are paid to councils annually by the Federal Government, with local government grant commissions in each state recommending the distribution of funding. But the methodology used to distribute these critical funds is seriously flawed. In addition, the funding has gone backwards due to an indexation freeze 10 years ago.

“This needs immediate attention to help rural and regional councils – who are already struggling to meet an unprecedented burden of increased costs and cost shifting – to get the funding their roads need.”

Council will write to the Federal Local Government Minister, the NSW Local Government Minister and the NSW Grants Commission to request:

  • A review of methodologies used to distribute Financial Assistance Grant funding with the aim of:

    o Reducing the population ( per capita) factor in the general-purpose grant allocation from 30% to 10%; and

    o Ensuring greater equity is delivered to regional and rural councils in the distribution of the roads component resulting in an equal per kilometre rate across all councils

  • Consideration be given to the Australian Government increasing Financial Assistance Grants to at least 1% or more of Commonwealth Tax Revenue to ensure effective, sustainable funding for local government.
  • Ensure that the Objects of the Local Government (Financial Assistance) Act 1995 are being adhered to and consider a review of the Act given the last review was in 2001.
  • Ensure that the National Principles governing the allocation of the Financial Assistance Grants are adequate and are being met.

Cr Chaffey said with the drop in Financial Assistance Grants from 1% to 0.5% of Federal taxation revenue, many councils across New South Wales had been forced to implement large rate increases.

/Public Release. View in full here.