Federal Government Budget 2019-20
Federal Government Budget 2019-20
Overview of Budget finances
The Federal Budget targets a cash surplus of $7.1 billion in 2019-20 and a projected cash surplus of $11.0 billion in 2020-21. In keeping with the way that Australian states and territories and the South Australian local government sector present their budgets (i.e. on an accrual accounting basis), the Federal Budget is targeting an operating surplus (or net operating balance) of $12.9 billion in 2019-20 improving to an operating surplus of $18.2 billion in 2010-21.
The Australian economy is expected to grow at an anticipated rate of 2.75 per cent in both 2019-20 and 2020-21. The Government is expecting unemployment to reduce to 5.0 per cent in 2019-20. The Government is forecasting that the near-term outlook for inflation will remain subdued with a rate of 2.25 per cent expected in 2019-20.
To review the LGA's latest news regarding the 2019-20 Federal Budget please click here.
Budget effects on local government in South Australia
Financial Assistance Grants
Commonwealth ‘Financial Assistance Grants’ (FAGs) for South Australian councils are estimated at $165.4 million in 2019-20. Approximately $82.7 million of these grants will be paid in advance and received by councils in June 2019. The underlying allocation of $165.4 million compares with an underlying allocation of $160.2 million in 2018-19. The increase would have been marginally higher but for an ongoing reduction in South Australia's population share relative to other jurisdictions.
FAGs continue to comprise two components: general purpose assistance grants and local roads grants. Both components are untied and can be spent according to each council’s own priorities. The general purpose assistance component ($122.2 million for South Australia in 2019-20) is distributed to states in the first instance on a per capita basis. The local roads grants component ($43.0 million for South Australia in 2019-20) is distributed to states on a historical basis whereby South Australia receives only 5.5 per cent of the national pool of funds (a basis which successive Commonwealth Governments have acknowledged is unfair for South Australian councils).
The SA Local Government Grants Commission recommends the distribution, to individual councils, of the pool of FAGs funding made available to South Australia. This is done in accordance with the Local Government (Financial Assistance) Act 1995, including the National Principles for allocating grants set out in that Act.
Supplementary Local Roads Program
The Commonwealth’s 'Supplementary Local Roads' Program for South Australia was reinstated in the 2017-18 Federal Budget at $20 million per annum for two financial years (i.e. 2017-18 and 2018-19). The 2019-20 Budget papers include an extension of this Program, at $20 million per annum, for a further two years (with the $40 million of funding expected to be paid to councils in June 2019). The Program originally was introduced in 2004-05 to rectify South Australia’s unfair share of the local roads component of FAGs funding.
Roads to Recovery Program
The 2018-19 Budget confirmed an earlier announcement that the Commonwealth’s ‘Roads to Recovery’ Program would be increased by $50 million per annum in 2019-20 to a level of $400 million per annum nation-wide. The 2019-20 Budget includes an announcement that the Program will be further increased to $500 million in 2019-20 and each of the following three financial years. The previous sunset date on the Program also has been removed. The ‘core’ Roads to Recovery Program funding for South Australian councils will be approximately $40 million in 2019-20 and in each of the following three years.
Roads to Recovery funding may be used, at a council’s discretion, on maintaining, renewing, replacing or upgrading existing roads or constructing new roads. The SA Local Government Grants Commission recommends the distribution of the pool of Roads to Recovery funding made available to South Australia. Allocations to individual councils are determined on the same basis as allocations covering the local roads grant component of FAGs.
After taking account of Commonwealth funding provided for the Department of Transport, Planning and Infrastructure to cater for management of local roads in unincorporated areas of the state, South Australia will receive 8.3 per cent of the national pool of Roads to Recovery funding in 2019-20.
Drought Communities Program
As part of the Commonwealth’s overall $1.8 billion Drought Support Package, the Drought Communities Program is providing 22 rural councils in South Australia with up to $1 million each to support regional communities through the drought. This funding is intended to provide immediate short-term support to communities facing hardship, including by providing employment for people whose work opportunities have been adversely affected by the drought. Applications to the Commonwealth by most councils close on 30 June 2019 and no matching funding is required.
Black Spot Program
Building on the current Black Spot Program which is investing $275 million from 2018-19 to 2021-22, the Budget confirms an extension of the Program from 1 July 2022 as well an increase in the funding level to $120 million nation-wide in 2019-20 and $110 million per annum thereafter. Payments are made to State and Territory Governments and the allocation to the South Australian Government is estimated at $8.6 million in 2019-20. Outcomes for South Australian councils in 2019-20 are dependent on a competitive application process, although local government’s share of the estimated allocation of $8.6 million in 2019-20 can be expected to be about $2.8 million.
Building Better Regions Fund Program
Funding for the Commonwealth’s ‘Building Better Regions Fund’ Program was boosted in the 2018-19 Budget and is investing $641.6 million over a four period ending in 2021-22. The Program is designed to support priority community infrastructure investment and employment generating projects in regional communities. Councils are eligible to apply for grant funding on a competitive basis.
The Commonwealth is providing $206.2 million for Round Four of the Program in 2019-20. Grants are available through two funding streams: Infrastructure Projects and Community Investments. A minimum grant amount of $20,000 applies to the Infrastructure Projects stream with a minimum grant amount of $5,000 under the Community Investments stream. The maximum grant amount under both streams is $10 million.
Regional Growth Fund Program
The Commonwealth’s ‘Regional Growth Fund’ Program commenced in 2018-19 and will cease on 30 June 2022. The Program is open to local government and provides grants of $10 million or more for major transformational projects, which support long-term economic growth and create jobs in regions. A total amount of $272.2 million is being invested in the Program over four years.
Bridges Renewal Program
The Commonwealth's 'Bridges Renewal' Program involving payments direct to local government continues in 2019-20 at an increased funding level of $121.3 million nation-wide. Outcomes for South Australian councils are dependent on a competitive application process.
Heavy Vehicle Safety and Productivity Program
The Commonwealth’s ‘Heavy Vehicle Safety and Productivity’ Program commenced in 2014-15 and is providing ongoing funding of $230 million (nation-wide) over four years from 2017-18 until 2021-22. The Budget confirms an extension of the Program beyond 2021-22 as well as an increase in funding levels in 2019-20 (to $95.0 million nation-wide). The Program seeks to deliver improved safety and productivity for the heavy vehicle industry. Councils are eligible to apply for grant funding on a nationally competitive basis.
As more detailed information becomes available, the LGA will analyse it and provide advice to councils, together with any corrections or clarification needed on any of the abovementioned Programs. The LGA also will provide advice on any material changes to a variety of other ongoing Commonwealth Programs which may have direct or indirect implications for South Australian councils. The main Programs involved are:
- Community Development Grants;
- Direct Action Climate Change Measures;
- Home Support Program;
- Mobile Phone Black Spots;
- National Partnership Agreement on Preventative Health;
- National Bushfire Mitigation;
- Natural Disaster Resilience;
- Natural Disaster Relief and Recovery Arrangements;
- Regional Aviation Access;
- Regional Connectivity Program;
- Regional Development Australia Committees;
- Safer Communities Fund; and
- Stronger Communities Fund.
To download the LGA response document click here: LGA Response to Federal Govt Budget 2019-20(71 kb)
To review the Australian Local Government Association Federal Budget media release and fact sheets click here.