Council calls for changes to unfair financial aid grants

Gunnedah Shire Council is calling on the federal and state governments to tackle the financial aid grant methodology that is leading regional and rural councils to miss out on desperately needed road funding.

In mayoral minutes at the June council meeting, Gunnedah Shire Mayor Jamie Chaffey told councilors that town councils received four to five times more funding per kilometer of road than country councils .

“Rural and regional councils have a smaller population, but a much larger land area,” Cr Chaffey said.

“In Gunnedah County we have over 1,400km of road network to maintain and, like other rural and regional councils, we have a smaller rate base and reduced capacity to generate revenue. We desperately need help to keep our roads maintained and safe.

“Financial assistance grants are paid to councils each year by the federal government, with each state’s local government grants commissions recommending the allocation of funds. But the methodology used to distribute these essential funds is seriously flawed. In addition, funding has decreased due to an indexing freeze 10 years ago.

“This requires immediate attention to help rural and regional councils – already struggling to cope with an unprecedented burden of rising and shifting costs – to get the funding their roads need. »

The Council will write to the Federal Minister for Local Government, the NSW Minister for Local Government and the NSW Grants Commission to request:

• A review of methodologies used to distribute financial aid grants with the goal of:
  • Reduce the population (per capita) factor in the allocation of general purpose grants from 30% to 10%; And
  • Ensure greater equity between regional and rural councils in the distribution of the road component, resulting in an equal kilometer rate across all councils.
• Consideration should be given to the Australian Government increasing financial assistance grants to at least 1% or more of Commonwealth tax revenue to ensure effective and sustainable funding of local government.
• Ensure compliance with the Local Government Objects (Financial Assistance) Act 1995 and consider a review of the Act as the last review was in 2001.
• Ensure that national principles governing the award of financial assistance grants are adequate and are respected.

Cr Chaffey said with financial assistance grants falling from 1% to 0.5% of federal tax revenue, many NSW councils were forced to implement steep rate increases .

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