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 2006-07 is $ 2173.7 million. This represents a nominal increase of approximately 5%.
| Local government funding breakdown | 2006-07 $m |
|---|---|
| Total Funding to Local Government | 2173.7 |
| General Purpose Assistance | 1161.3 |
| Untied Local Road Funding | 515.3 |
| Roads to Recovery | 404.7 |
| Other SPPs | 92.4 |
Chart 1 illustrates the division of total funding for local government between categories.
Chart 1: Commonwealth Funding for Local Government 2006-07
FAGs consist of general purpose assistance and untied local road funding. In 2006-07, local government will receive $1676.8 million and this will increase to $1871 million by 2009-10.
Table 2.1 outlines total FAGs for the period 2005-06 to 2009-10.
| Financial assistance grants | 2005-06 $m | 2006-07 $m | 2007-08 $m | 2008-09 $m | 2009-10 $m |
|---|---|---|---|---|---|
| Total Financial Assistance | 1624.3 | 1676.8 | 1739.0 | 1804.0 | 1871.0 |
| General Purpose Assistance | 1125.1 | 1161.4 | 1204.5 | 1249.5 | 1295.9 |
| Untied Local Road Funding | 499.2 | 515.4 | 534.5 | 554.5 | 575.1 |
| Financial assistance grants | 2005-06 % | 2006-07 % | 2007-08 % | 2008-09 % | 2009-10 % |
|---|---|---|---|---|---|
| Total Financial Assistance | n/a | 1.6% | -0.6% | 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% |
FAGs to local government continue to decrease as a proportion of total Commonwealth taxation revenue. In 1996-97, FAGs represented 0.97% of total Commonwealth taxation revenue. The share of total Commonwealth taxation revenue will be 0.77% in 2006-07 and it is estimated to be 0.75% by 2009-10. The share of total Commonwealth revenue will be 0.72% in 2006-07and it is estimated that by 2009-10 it will be just 0.70%.
A breakdown of FAGs to Local Government by Jurisdiction is provided in Table 3.
| Financial assistance grants | NSW $m | VIC $m | QLD $m | WA $m | SA $m | TAS $m | ACT $m | NT $m | Total $m |
|---|---|---|---|---|---|---|---|---|---|
| Total Financial Assistance | 535.8 | 392.8 | 324.4 | 193.8 | 116.1 | 55 | 35 | 23.7 | 1676.6 |
| General Purpose Assistance | 386.3 | 286.6 | 227.8 | 115 | 87.8 | 27.7 | 18.5 | 11.6 | 1161.3 |
| Untied Local Road Funding | 149.5 | 106.2 | 96.6 | 78.8 | 28.3 | 27.3 | 16.5 | 12.1 | 515.3 |
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%
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. No SPP capital payments have been announced beyond 2006-07.
SPPs are expected to increase by 21.3% in 2006-07. This largely reflects an increase in Auslink Roads to Recovery funding of 32%.
Tables 4.1 - 4.4 provide details on SPPs for the period 2004-05 to 2008-10.
| Specific purpose payments | 2005-06 $000 | 2006-07 $000 | 2007-08 $000 | 2008-09 $000 | 2009-10 $000 |
|---|---|---|---|---|---|
| Total current | 395508 | 495448 | 550018 | 478034 | 66578 |
| Disability services | 1457 | 1489 | 1527 | 1556 | 1599 |
| Children services | 58667 | 58832 | 61741 | 63952 | 64979 |
| Roads to Recovery- AusLink | 307624 | 404651 | 483800 | 412526 | 0 |
| Regulation Reduction Incentive Fund | 22335 | 20347 | 0 | 0 | 0 |
| Strengthening Tasmania | 3225 | 7929 | 750 | 0 | 0 |
| Weipa Structural Adjustment Package | 2200 | 2200 | 2200 | 0 | 0 |
| Specific purpose payments | 2005-06 $000 | 2006-07 $000 | 2007-08 $000 | 2008-09 $000 | 2009-10 $000 |
|---|---|---|---|---|---|
| Total capital | 15108 | 1650 | 0 | 0 | 0 |
| Bert Hinkler Hall of Aviation | 1450 | 0 | 0 | 0 | |
| Development of Sewerage Schemes for Boat and Sisters Beach | 108 | 200 | 0 | 0 | 0 |
| South Australian State Aquatic Centre | 15000 | 0 | 0 | 0 | 0 |
| Specific purpose payments | 2005-06 $000 | 2006-07 $000 | 2007-08 $000 | 2008-09 $000 | 2009-10 $000 |
|---|---|---|---|---|---|
| Total Specific Purpose Payments | 410616 | 497089 | 550018 | 478034 | 66578 |
| Total current | 395508 | 495439 | 550018 | 478034 | 66578 |
| Total capital | 15108 | 1650 | 0 | 0 | 0 |
Tables 5.1 - 5.3 provide a breakdown of SPPs to Local Government by jurisdiction for 2006-07.
| SPPs: Current | NSW $000 | VIC $000 | QLD $000 | WA $000 | SA $000 | TAS $000 | ACT $000 | NT $000 | Total $000 |
|---|---|---|---|---|---|---|---|---|---|
| Total current | 146777 | 106723 | 102078 | 61930 | 34180 | 22793 | 7458 | 13500 | 495439 |
| Disability services | 194 | 607 | 688 | 0 | 0 | 0 | 0 | 0 | 1489 |
| Children services | 19395 | 19849 | 8385 | 2819 | 1212 | 2373 | 0 | 4799 | 58832 |
| Roads to Recovery - Auslink | 123550 | 83125 | 80925 | 58531 | 31250 | 12500 | 6250 | 8520 | 404651 |
| Regulation Reduction Incentive Fund | 3638 | 3142 | 9880 | 580 | 1718 | 0 | 1208 | 181 | 20347 |
| Strengthening Tasmania | 0 | 0 | 0 | 0 | 0 | 7920 | 0 | 0 | 7920 |
| Weipa Structural Adjustment Package | 0 | 0 | 2200 | 0 | 0 | 0 | 0 | 0 | 2200 |
| SPPs: Capital | NSW $000 | VIC $000 | QLD $000 | WA $000 | SA $000 | TAS $000 | ACT $000 | NT $000 | Total $000 |
|---|---|---|---|---|---|---|---|---|---|
| Total capital | 0 | 0 | 1450 | 0 | 0 | 200 | 0 | 0 | 1650 |
| 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 | 200 | 0 | 0 | 200 |
| SPPs: Current | NSW $000 | VIC $000 | QLD $000 | WA $000 | SA $000 | TAS $000 | ACT $000 | NT $000 | Total $000 |
|---|---|---|---|---|---|---|---|---|---|
| Total Specific Purpose Payments | 146777 | 106723 | 103528 | 61930 | 34180 | 22993 | 7458 | 13500 | 497089 |
For information about ALGA's analysis of the Budget regarding Financing local government please contact:
- John Pritchard
- Executive Director, Policy and Research
Australian Local Government Association - Phone: 02 6122 9414
- john.pritchard@alga.asn.au