Federal Assistance Grants

Local Government is at the quality of life, social and economic coal face of the community, concerned with not only roads, rates and rubbish, but also health services, food security, public safety and community events to name a few.

Council’s main funding source outside rates includes Financial Assistant Grants (FAGS) from the Federal Government (Feds). The FAG’s programme consists of two components:

  • a general purpose component which is distributed between the states and territories according to population (i.e. on a per capita basis), and
  • an identified local road component which is distributed between the states and territories according to fixed historical shares.

Both components of the grant are untied in the hands of local government, allowing councils to spend the grants according to local priorities. The amount of the FAG’s pool changes annually in line with changes in population and the Consumer Price Index, so as to maintain its real per capita value.

However, in 2014 the Australian Government froze the indexation of FAG’s over the next four years to save money. By doing this it deprives Tasmania Councils of around $18mill to spend on local priorities that they choose.

The Feds, to offset the loss to Councils, have doubled the funding of Roads to Recovery to $700mill and increased the Black Spot funding by $100mill nationally. Great, but, now instead of having the ability of spending “untied” funds, Councils have to apply for the funds and that is if individual Councils has a project that fits the funding criteria.

Whilst the Feds gain savings at the community’s cost, it lessens Council’s ability to fund community priorities, adds more work to councils and simply gives the Feds an opportunity to ride in on their white steed and make a big fella of themselves in announcing successful grant recipients.

Local Government is at the coal face, not the Federal Government – Federal Assistance Grants indexation need to be reinstated immediately.