ALGA 2006-07 Budget submission
3 January 2006
Feds urged to use surplus to boost local services and infrastructure
The Australian Government must use part of its substantial surplus to reform federal-local government financial relations, giving local services and infrastructure a much-needed shot in the arm, the President of the Australian Local Government Association, Cr Paul Bell, said today.
"The current system of financial assistance grants should be replaced with one that gives local government access to a fair share of federal taxation revenue," Cr Bell said. The call comes in ALGA's submission for the 2006-07 Federal Budget, publicly released by Cr Bell today.
"Reform of federal-local government financial relations remains an outstanding item on the national reform agenda," Cr Bell said. "It's unfinished business."
"Federal-state financial relations were addressed with the new tax system. We now need to see a new deal for local government - the only sphere of government in Australia that remains under severe financial pressure.
"Councils are faced with:
- ageing infrastructure, much of it nearing the end of its useful life
- widespread cost-shifting to councils by other spheres of government
- escalating demand for social services
- rapidly ageing populations, putting pressure on revenue and services
- significant demographic change, with many councils in areas of rapid growth
- lack of real growth in core state and federal grants
- significant barriers to raising own-source revenue.
"Local government maintains infrastructure worth around $110 billion including about 680,000km of roads and 29,000 timber bridges, many of which are more than 50 years old and beyond their useful life.
"There has also been a strong and well documented increase in demand for human services, which has come at the cost of funding for more traditional, property-based services.
"Meanwhile, cost shifting by state and federal governments has an impact on local government estimated at between $500m and $1.1 billion a year.
"We need to move away from the archaic system of financial assistance grants to a fair share - at least one per cent - of federal taxation revenue.
"We have seen financial assistance grants drop as a proportion of total Commonwealth revenue from nearly 1.2% in 1993-94, to 0.8% today. And it's predicted to fall to below 0.77% by 2007-08.
"Local government recognises and applauds the specific purpose assistance provided by the Australian Government for tasks such as local road maintenance through the much-needed and much-appreciated Roads to Recovery program.
"But it's now time to press ahead and address the chronic under-funding of the local government grants program," Cr Bell said.
The Australian Government expects a Budget surplus of $11.5 billion in 2005-06, an increase of $2.5 billion since the 2005-06 Budget.
ALGA's Federal Budget submission for 2006-07 can be found at: www.alga.asn.au/submissions/2005/
- Contact:
- Cr Paul Bell AM, ALGA President - 0418 791 596
- Rohan Greenland, ALGA Public Affairs - 0412 85 9434 / 02 6122 9434
