While the Australian Local Government Association has welcomed some of the initiatives announced recently in the 2000-2001 Federal Budget, namely improved services to rural and regional Australia, it is disappointed once again that there is no new money for Local Government.
Sold as a budget to assist rural and regional Australia, total assistance will be $1.83 billion over the next four years. Most of this spending is targeted in the areas of health service provision, youth allowance and agricultural advancement.
However, there is no new money for roads. ALGA rightly asserts that, despite the rhetoric about the urgent need for improved infrastructure in rural and regional Australia, there is no extra money for roads, rather the Government has merely reallocated money from urban centres to non urban areas.
All told, the budget brought little joy to Local Government. In recent years, Local Government has seen its funding from the Commonwealth Government steadily declining in real terms. Financial Assistance Grants in 1989/1990 were 0.19% of GDP. During 1999/2000 this will fall to 0.15% while Grants are expected to be 0.14% in 2000/2001.
Although it is widely recognised that Councils across the nation have been left to pick up the pieces, where Central Governments have deserted communities in the name of economic rationalism, Local Government continues to struggle to maintain service levels within a climate of dwindling resources.
Specific Purpose Payments to Local Government have also dropped dramatically. In the 1999/2000 budget, the Commonwealth Government estimated these payments to Local Government during 2000/2001 would be $276 million. These have now been pared back by more than 50%, currently estimated to be only $125 million.
Specific Purpose Payments come to Local Government in the form of recurrent and capital payments. They are for aged care, disability and children’s services, training for Aboriginals and the Local Government Incentive Programme. This reduction will impact severely on Councils’ ability to deliver these vital community services.
With the impact of the GST, the Budget predicts the CPI will increase by 5.25 percent. However, this has not been factored into the Financial Assistance Grants formula as the Government asserts Councils will be able to claim back GST input credits. As the final consumer is unable to claim input credits, Councils then face the dilemma that, if they raise rates in line with the CPI rise, this will place an even greater financial burden on their residents and ratepayers.
Designed to win back disillusioned voters in regional and rural Australia, the Budget has done little to assist Councils as they support their communities in these areas, or for those in metropolitan areas also doing it hard.
