Hinkler Councils to lose $2m each from grants change

Two Councils in the Hinkler electorate fear they will have to raise rates or reduce community services after the Financial Assistance Grants they receive from the Australian Government were cut by about $2 million each.

Bundaberg and Fraser Coast Mayors Jack Dempsey and George Seymour said a new formula being used by the Queensland Local Government Grants Commission to distribute Financial Assistance Grants was “unfair, unjust and inequitable”.

“With 81 per cent of the tax collected in Australia going to the Federal Government, 16 per cent to State Governments and only three per cent going to local governments, Councils rely on grants like these to deliver the services our local communities need and deserve,” Cr Seymour said.

“The new formula the Grants Commission is now using puts our two Councils in the same bracket as Councils like Brisbane, Cairns and the Gold Coast and fails to take into account the high level of socio-economic disadvantage in Hinkler.

“Bundaberg and the Fraser Coast are now placed in the minimum grant group despite the fact we have among the highest levels of unemployment in the country, more people on age pensions, more people with disabilities and a much lower median weekly household income.

“We simply don’t have the same ‘capacity to pay’ as our counterparts in metropolitan areas as the Grants Commission has claimed.”

Cr Seymour said the changes to the grant distribution formula also affected Toowoomba and Rockhampton, and all four Mayors would be seeking to meet with the Local Government Minister and Queensland Local Government Grants Commission as soon as possible.

“While we appreciate the funding support we receive from other levels of governments through programs such as the Hinkler Regional Deal and the Works for Queensland program, the Financial Assistance Grants are vital for Councils to deliver important community services,” he said.

“The Fraser Coast has almost 40 per cent of our community on pensions compared to the Queensland average of 20 per cent while the median weekly household income in our region is $906 compared to the state average of $1402.

“In addition, 21 per cent of local children are developmentally vulnerable compared to the Queensland average of 12.3 per cent and the national average of 9.6 per cent.

“With statistics like these, regions like the Fraser Coast and Bundaberg need more support from other levels of government, not less, to provide the infrastructure and services our communities need.”

Mayor Dempsey is a member of the LGAQ policy executive and represents Queensland on the board of the Australian Local Government Association (ALGA).

Mayor Seymour is Queensland’s representative on the board of Regional Capitals Australia (RCA).
 

BACKGROUND

The modern era of federal funding for local government began in the 1970s with the Whitlam Government recognising that rapid changes in responsibilities faced by councils required direct support from the Commonwealth.

This led to the creation of personal income tax transfers under the Fraser Government at a rate of 2% of personal income tax revenue. This was subsequently reduced by the Hawke Government to 1% of total Commonwealth tax revenue (CTR). Today it’s around 0.6%.

Over time, the roles and responsibilities of local governments have risen as a result of increasing community demand, cost shifting and the need to address market failure, particularly in rural areas.

While the roles and responsibilities of local government have grown significantly over time, its revenue base has not.

The capacity of local governments to raise revenue is important to their financial sustainability and their ability to promote the well-being of their local communities.

Many local governments across Australia have insufficient revenue-raising capacity to maintain or upgrade their significant infrastructure holdings or provide the level of services that their communities desire.