2019-03-12 Services & Organisation Committee Agenda

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA                                12 MARCH 2019


In practice, this means that less money is trickling down from the level of government that
collects the most revenue to the level of government that delivers the most local services. This
trend is impacting on the long-term financial sustainability of the local government sector across
Australia. In doing so, it puts more pressure on local governments to increase taxation via higher
general rates and charges when residents have been already paying higher taxation to other
levels of government (e.g. the introduction of GST).

Local governments across Australia are calling on the Commonwealth to commit to increasing
the Financial Assistance Grants paid to local government to the equivalent of 1% of the total
Commonwealth taxation revenue.

Why is this important to Noosa Shire Council?
Compared to most other local governments, our Council is in a strong financial position.
However, having a more equitable distribution of federal funding to local government would result
in an increase of grant revenue for councils that could be used to provide services at the local
level.

Our Council’s current annual Financial Assistance Grant allocation is set out below.

General purpose grant – $1,137,376
Identified road component – $1,090,606
Total annual FAG Grant currently received by Noosa Shire Council – $2,236,982

Note: This report is not intended to address the methodology for the horizontal equalisation
element of the FAG grant but essentially, the two components above make up the total FAG
grant received by our Council. Also, unlike most other grants, the FAGs grant is untied – i.e. the
general purpose grant can be used for whatever purpose the Council determines and the roads
component can be applied to whatever roads purpose the Council determines.
If this lobbying campaign is successful and the total pool of FAGs funds increases to 1% of total,
Commonwealth taxation revenue, then our Council’s FAG Grant would increase from $2.236M to
$4.067M (an increase of $1.830M).
Obviously, our Council would then have choices about how this additional grant funding could be
used for the benefit of our community. To put this in context, it would equate to avoiding a
general rate increase of approximate 3.5% for our ratepayers.
It is important for our Council to join with other local governments across Australia to call upon
change to how funding is distributed from the Commonwealth to the local governance sector.
Previous Council Consideration
Nil.

Finance
Our Council currently receives $2,236,982 annually in Financial Assistance Grants. A successful
campaign to restore Financial Assistance Grants to 1% of the total Commonwealth taxation
revenue could result in our FAGs grant being increased by $1.830M.

Risks & Opportunities
The long-term financial sustainability of the local government sector across Australia has been
impacted by the gradual degradation of the FAGs grants being paid to local government by the
Commonwealth as a proportion of total Commonwealth taxation revenue. This campaign by the
ALGA and LGAQ presents an opportunity for our Council to provide support for changing the
current funding inequities to ensure that more funding is provided to local governments who
provide services to communities at the local level.


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