When the Abbott government’s first annual Budget was released in May 2014, it was a grim atmosphere of doom and gloom as councils despaired that services that Australians take for granted would be annihilated.
For local governments, this sense of dread wasn’t unfounded. Especially because the 2014-15 Budget put an unprecedented freeze on indexation of Financial Assistance Grants (FAG) – a direct funding program that councils depend upon to deliver optimal services.
But the Coalition government has evidently learned that such brutal ‘hack & slash’ policies get you nowhere in electoral popularity if you model your spending habits on Ebenezer Scrooge.
And as the government’s polling fell like a giant on a beanstalk in early 2015, it came time for it to make amends with voters and sectors that have enormous stakes in federal funding.
As part of Treasurer Joe Hockey’s big push to win back support as well as press on with the government’s ideological commitment to building roads across Australia, the Budget has included major boosts to existing roads programs that have elated the local government sector.
One of these is the federal government’s Roads to Recovery program, which will be doubled with an extra $350 million provided to councils in the coming year.
The government will also significantly boost its Black Spots funding from $60 million to $160 million in both 2015-16 and 2016-17.
Roads aren’t the only beneficiary of bolstered federal funding. It also includes the continuation of funding for regional and remote aerodromes under the Regional Aviation Access Program, with an extra $40 million to upgrade airstrips and boost air services for remote communities.
Australian Local Government Association (ALGA) President Troy Pickard welcomed the new funding in the federal Budget, saying that the doubling of Roads to Recovery is an important boost to all councils who need help maintaining the first and last miles of the transport network, on which the nation relies to move goods and people.
“Local Government is responsible for around 80 per cent of the nation’s roads by length and while investment in major transport infrastructure is important, we cannot afford to forget that almost every journey begins and ends on local roads,” Mr Pickard said.
Although ALGA was glad that additional funding will be allocated to the investment of local infrastructure in the face of declining investment as the mining boom winds down, the Association isn’t ignoring the elephant in the room.
The freeze on the indexation of FAGs remains a significant pain point for councils, and this new Budget doesn’t end that debacle. It was the last thing that cash-strapped councils needed in the face of rate caps and cost shifting.
Although the Budget indicates that the federal government will restore the indexation of FAGs in 2017-18, the financial losses experienced by councils speak for themselves.
The reduced grants to councils have been estimated to total $96 million in 2014-15, and an additional $200 million will be forgone in the coming year, as well as a further $308 million lost from the value of grants in 2016-17.
And it all adds up as the years pass by, with the federal government’s own figures estimating that a total of $925 million will be lost over the Budget out years, resulting in a permanent reduction of around 13 per cent to future grants.
“These grants are absolutely essential to local communities as they allow councils to provide a reasonable level of service and infrastructure to local residents,” Mr Pickard said.
He said 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.
Councils in Queensland joined Mr Pickard’s call for FAGs to be restored as soon as possible, as Local Government Association of Queensland chief executive Greg Hallam said is disappointing that the government has failed to heed local government’s calls to reverse last year’s decision to freeze indexation of FAGs.
However, Mr Hallam also welcomed the Budget’s one-off doubling of Roads to Recovery this year as it will help local economies across the state.
Queensland has been the focus of many big funds that help support existing council initiatives. Mr Hallam applauded the funding, “particularly the promise to help fund new ports, power and water infrastructure”.
Some of the new funding includes $100 million to help upgrade and maintain northern Australia beef transport roads; a support package valued at $333 million for drought hit regions to help kickstart local economies, fight weeds and pests and expand existing concessional loan schemes; as well as nearly $40 million to help upgrade airstrips and subsidise remote air services.
