Councils highlight Australia's revenue problem

Australia’s 538 local councils have united at the Australian Local Government Association (ALGA)’s National General Assembly to call on the Australian Parliament to deliver an immediate increase in untied funding, warning the financial sustainability of councils and the services communities rely on are increasingly at risk.

Delegates unanimously endorsed an emergency motion calling for fairer funding for local government and backed a joint letter to be tabled with every Member of the House of Representatives and the Senate.

The letter, signed by the presidents of state and territory local government associations, calls for a multi-partisan commitment to a stronger funding partnership with councils.

Australian Local Government Association President, Mayor Matt Burnett, said the motion reflected the shared reality facing councils across metropolitan, regional, rural and remote Australia.

“Financial sustainability is not an abstract discussion for local government. It is about whether councils can keep doing the job our communities expect us to do,” Mayor Burnett said.

“Councils are responsible for the roads, bridges, libraries, pools, parks, footpaths, stormwater systems, waste services and community facilities Australians rely on every day.

“We are also the first people communities call when something goes wrong, whether that is a local road failure, a disaster, a planning issue or a service disruption.

“Yet councils are increasingly being asked to do more with less funding certainty, less flexibility, limited revenue capacity and less ability to plan for the long term.”

The emergency motion calls on the Australian Government to act now to deliver fairer funding through an immediate increase in untied funding for all councils.

Mayor Burnett thanked the Australian Services Union (ASU) and United Services Union (USU) for their long support of fairer funding to councils.

ASU National Secretary Emeline Gaske said the halving of the value of Financial Assistance Grants as a share of national taxation over the past 30 years, from 1 percent in 1996 to just 0.49 percent in 2026-27, increased the urgency of the call for fairer funding.

“Council workers keep Australian communities running every single day. They collect our bins, running our libraries, maintaining our roads and support communities through floods and fires. They do this work professionally and with commitment, but they need councils that are properly resourced to back them up,” Ms Gaske said.

United Services Union General Secretary Graeme Kelly said the shortfall in funding had forced councils to make difficult budget choices.

“The decline in Federal funding has real consequences for the workers and communities who depend on council services. Restoring the 1 percent benchmark is the single most important thing Canberra can do for local government,” Mr Kelly said.

The call for fairer funding echoes Australia Institute research showing that Australia raises relatively little revenue overall and that Federal Government funding of sub-national governments has not met expected levels.

“Federal revenue to states and councils is falling further and further behind expectations,” said Matt Grudnoff, Senior Economist at The Australia Institute.

“This is money that would and should go to local amenities, roads, hospitals, schools, and other essential local and state services.

“The entire tax system needs reform, and it is the Federal Government that has to lead this.

“Unlike local and state governments, the Federal Government could easily and equitably raise revenue by applying GST to things like private health insurance and private school fees for a good start.

“The Feds could also tax the gas exports which are currently given away for free. Scrapping the fuel tax credit scheme, under which taxpayers pay for the diesel used by mining companies, would raise $11 billion a year alone.

“There are plenty of things the Commonwealth can do to fix the problems that councils are highlighting.

“In the meantime, local governments are being forced to cut spending on local roads, bridges, libraries and community facilities.”