Fact sheet 2: Financing local government
Australian Government funding to local government is in two components - financial assistance grants (FAGs); and specific purpose payments (SPPs), which include Roads to Recovery (for more information on road funding see Fact Sheet 3)
Total funding for local government in 2005-06 is $ 2066.6 million.
| Funding sources | 2005-06 $m |
|---|---|
| Total | 2066.6 |
| General purpose assistance | 1126.7 |
| Untied local road funding | 500.0 |
| Roads to Recovery | 336.1 |
| Other Specific Purpose Payments | 103.8 |
Chart 1 illustrates the division of total funding for local government between categories.
Chart 1: Commonwealth funding for local government 2005-06
FAGs consist of general purpose assistance and untied local road funding. In 2005-06, local government will receive $1626.7 million and this will increase to $1804 million1 by 2008-09.
1This includes the $9.6 million underpayment from 2004-05
Table 2.1 outlines total FAGs for the period 2004-05 to 2008-09 whilst Table 2.2 outlines the real growth between budget years.
| FAGs | 2004-05 $m | 2005-06 $m | 2006-07 $m | 2007-08 $m | 2008-09 $m |
|---|---|---|---|---|---|
| Total | 1540.2 | 1626.7 | 1690.0 | 1739.0 | 1804.0 |
| General purpose assistance | 1066.8 | 1126.8 | 1170.6 | 1204.6 | 1249.6 |
| Untied local road funding | 473.4 | 500.0 | 519.5 | 534.5 | 554.5 |
| FAGs | 2004-05 % | 2005-06 % | 2006-07 % | 2007-08 % | 2008-09 % |
|---|---|---|---|---|---|
| Total | n/a | 1.6 | -.06 | 0.9 | 1.7 |
| General purpose assistance | n/a | 1.6 | -0.6 | 0.9 | 1.7 |
| Untied local road funding | n/a | 1.6 | -0.6 | 0.9 | 1.7 |
2Real growth is calculated using the non-farm product-implicit price deflator.
FAGs to local government continue to decrease as a proportion of total Commonwealth revenue. In 1996-97, FAGs represented 0.97% of total Commonwealth revenue. It is estimated that by 2008-09 it will be just 0.74%.
A breakdown of FAGs to local government by jurisdiction is provided in Table 3.
| FAGs | NSW $m | VIC $m | QLD $m | WA $m | SA $m | TAS $m | ACT $m | NT $m | Total $m |
|---|---|---|---|---|---|---|---|---|---|
| Total | 521.6 | 381.2 | 312.6 | 187.7 | 113.1 | 53.5 | 34.1 | 22.9 | 1626.7 |
| General purpose assistance | 376.5 | 278.1 | 218.9 | 111.3 | 85.6 | 27.0 | 18.1 | 11.2 | 1126.7 |
| Untited local road funding | 145.1 | 103.1 | 93.7 | 76.4 | 27.5 | 26.5 | 16 | 11.7 | 500 |
Local government has argued in its budget submission that its FAGs should increase to 1% of total Commonwealth taxation revenue. Chart 2 illustrates the difference between the amount local government receives in FAGs and 1% or a Fair Share of Commonwealth taxation revenue.
Chart 2: FAGs versus 1%
Chart 3 illustrates the difference in the real growth in FAGs versus that of Commonwealth taxation revenue.
Chart 3: Real growth in FAGs versus real growth in Commonwealth taxation revenue
Specific purpose payments (SPPs) are payments made by the Commonwealth direct to local government. SPPs enable local government to implement particular policies or deliver defined services on behalf of the Australian Government.
The main areas for funding include disabled persons homes, childcare programs as well as Roads to Recovery.
The new measure, Regulation Reduction Incentive Fund, has also been included as an SPP.
SPPs are split into two categories - current and capital purposes. Current purposes refer to funding for programs whilst capital purposes include funding for infrastructure.
SPPs are expected to increase in real terms in 2005-06 by 33.5%. This is due primarily to the increase in funding to local government to provide additional childcare places as well as the Australian Government meeting its election commitments including the Regulation Reduction Incentive Fund (see fact sheets for more information).
Tables 4.1 - 4.4 provide details on SPPs for the period 2004-05 to 2008-09.
| Specific Purpose Payments | 2004-05 $000 | 2005-06 $000 | 2006-07 $000 | 2007-08 $000 | 2008-09 $000 |
|---|---|---|---|---|---|
| Total | 317033 | 438468 | 412469 | 390945 | 389088 |
| Disability services | 1417 | 1457 | 1498 | 1541 | 1574 |
| Children services | 55763 | 55869 | 55508 | 56454 | 57514 |
| Roads to Recovery | 256430 | 336070 | 343000 | 330000 | 330000 |
| Regulation Reduction Incentive Fund | 1600 | 35552 | 6508 | 0 | 0 |
| Strengthening Tasmania | 1500 | 7320 | 3755 | 750 | 0 |
| Alexandra Recreation Reserve and Gallipoli Park | 15 | 0 | 0 | 0 | 0 |
| Woodend Bike Trail | 158 | 0 | 0 | 0 | 0 |
| Lancefield Visitor Information Centre | 150 | 0 | 0 | 0 | 0 |
| Weipa Structural Adjustment Package | 0 | 2200 | 2200 | 2200 | 0 |
| Specific Purpose Payments | 2004-05 $000 | 2005-06 $000 | 2006-07 $000 | 2007-08 $000 | 2008-09 $000 |
|---|---|---|---|---|---|
| Total | 1000 | 1450 | 0 | 0 | 0 |
| Bert Hinkler Hall of Aviation | 0 | 1450 | 0 | 0 | 0 |
| Development of sewerage schemes for Boat and Sisters Beach | 1000 | 0 | 0 | 0 | 0 |
| Specific Purpose Payments | 2004-05 $000 | 2005-06 $000 | 2006-07 $000 | 2007-08 $000 | 2008-09 $000 |
|---|---|---|---|---|---|
| Total | 318033 | 439918 | 412469 | 390945 | 389088 |
| Total current | 317033 | 438468 | 412469 | 390945 | 389088 |
| Total capital | 1000 | 1450 | 0 | 0 | 0 |
| Specific Purpose Payments | 2004-05 % | 2005-06 % | 2006-07 % | 2007-08 % | 2008-09 % |
|---|---|---|---|---|---|
| Total | n/a | 33.5 | -9.8 | -7.1 | -2.4 |
| Total current | n/a | 33.5 | -9.5 | -9.3 | -2.4 |
| Total capital | n/a | 40.0 | -100.0 | n/a | n/a |
Tables 5.1 - 5.3 provide a breakdown of Specific Purpose Payments to local government by jurisdiction for 2005-06
| Specific Purpose Payments | NSW $000 | VIC $000 | QLD $000 | WA $000 | SA $000 | TAS $000 | ACT $000 | NT $000 | Total $000 |
|---|---|---|---|---|---|---|---|---|---|
| Total | 124861 | 94532 | 79557 | 53539 | 31798 | 28738 | 13444 | 11999 | 438468 |
| Disability services | 191 | 593 | 673 | 0 | 0 | 0 | 0 | 0 | 1457 |
| Children services | 19026 | 20365 | 6815 | 3095 | 2354 | 1659 | 0 | 2555 | 55869 |
| Roads to Recovery | 101200 | 69130 | 65425 | 46000 | 25000 | 15315 | 9000 | 5000 | 336070 |
| Regulation Reduction Incentive Fund | 4444 | 4444 | 4444 | 4444 | 4444 | 4444 | 4444 | 4444 | 35552 |
| Strengthening Tasmania | 0 | 0 | 0 | 0 | 0 | 7320 | 0 | 0 | 7320 |
| Alexandra Recreation Reserve and Gallipoli Park | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Woodend Bike Trail | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Lancefield Visitors Information Centre | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Weipa Structural Adjustment Package | 0 | 0 | 2200 | 0 | 0 | 0 | 0 | 0 | 2200 |
| Specific Purpose Payments | NSW $000 | VIC $000 | QLD $000 | WA $000 | SA $000 | TAS $000 | ACT $000 | NT $000 | Total $000 |
|---|---|---|---|---|---|---|---|---|---|
| Total | 0 | 0 | 1450 | 0 | 0 | 0 | 0 | 0 | 1450 |
| Bert Hinkler Hall of Aviation | 0 | 0 | 1450 | 0 | 0 | 0 | 0 | 0 | 1450 |
| Development of sewerage schemes for Boat Harbour Beach and Sisters Beach | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| NSW $000 | VIC $000 | QLD $000 | WA $000 | SA $000 | TAS $000 | ACT $000 | NT $000 | Total $000 |
|---|---|---|---|---|---|---|---|---|
| 124861 | 94532 | 81007 | 53539 | 31798 | 28738 | 13444 | 11999 | 439918 |
