New research shows erosion in federal funding has been terrible for SA’s local roads

The report Potholes and pitfalls: how to fix local roads recommends the Federal Government increases untied funding to councils through Financial Assistance Grants by $600 million per year, and Roads to Recovery funding by $400 million per year.

More than 75 per cent of Australia’s roads are managed by councils and for many regional and remote councils there is little in the way of options to keep their roads in good condition.

Current federal funding to councils is not keeping up with increases in road construction and maintenance costs.

An extra $1 billion in funding would provide an additional 25 per cent of top of what councils are spending on road maintenance.

The call for funding is being echoed by the Local Government Association SA and Australian Local Government Association, requesting Financial Assistance Grants be restored to at least one percent of Commonwealth taxation revenue and Roads to Recovery funding increased to $800 million per year.

Local Government Association SA President Mayor Dean Johnson said the additional annual funding would benefit South Australian roads and communities, ensuring the money goes to where it is needed most.

“Councils play a huge role in the liveability of our communities, but they cannot maintain roads to the condition needed when the cost to do so is being outstripped by road freight and traffic,” Mayor Johnson said.

“Road maintenance is the single largest expenditure councils have, and for regional and rural councils they often do not have the revenue needed to keep up with the problem – particularly when faced with damage from natural disasters.”

Speaking about the report, Grattan Institute Transport and Cities Program Director Marion Terrill said the Federal Government needed to help under-resourced councils better manage road networks and invest where it matters most.

“Taxpayers would get better bang for their buck if the Federal Government spent an extra $1 billion on improving our local roads rather than on building new mega projects in the major cities,” Marion Terrill said.

“What’s needed to put the road network on a better path is more funding better targeted at where it is needed most, and reforms to ensure that councils have the tools and time to fix the potholes and give their communities the roads they need.”

The report highlights that many regional, rural and remote councils face additional challenges in maintaining their local roads, based on their large geographic size and relatively small ratepayer base.

Yorke Peninsula has the most kilometres of road across South Australia, followed closely by Mid Murray and Wakefield councils.

Yorke Peninsula Council Mayor Darren Braund said the call for increased federal funding was essential to the safety and productivity of local roads.

“Our road networks are lifelines to our communities and to ensure the safety of our residents and visitors, Federal support is needed,” Mayor Braund said.

“With nearly 4000 kilometres of roads, not including Federal and State Government-owned roads, situated within the district, council understands how vital they are to the community.

“We had almost 530,000 visitors within the last financial year, which again highlights the importance of a smooth and safe drive to our region.

“But investing in road infrastructure isn't just about smoother drives – it's an investment in our economic health, safety, and overall wellbeing.”

The Grattan Institute has also recommended the Federal Government establish a new $200 million per year fund to assess and upgrade local roads identified as priority freight routes.

The Federal Government is currently undertaking a review of Australia’s Infrastructure Investment Pipeline, which also includes local government road funding programs.

Background

• Australian councils are responsible for more than three quarters (77 per cent) of Australia’s roads by length, equating to about 678,000km.
• ALGA’s 2021 National State of the Assets report found eight per cent of sealed local government roads and 14 per cent of unsealed local government roads in Australia are in poor condition, function and capacity.

Roads to Recovery Program

• Roads to Recovery funding is provided to local governments to support the construction and maintenance of the nation's local roads.
• In the 2023-24 Federal Budget, $484 million was allocated to the Roads to Recovery program.
• ALGA’s 2023-24 Pre-Federal Budget Submission advocated for an increase in Roads to Recovery funding to $800 million per year.

Financial Assistance Grants

• In the last Federal Budget, Australia’s councils received a total of $3.1 billion in Financial Assistance Grants.
• The value of Financial Assistance Grants as a percentage of Commonwealth taxation revenue has declined from 1 percent in 1996 to 0.5% today.
• Financial Assistance Grants are indexed annually based on increases to population and CPI, but this indexation was frozen for three years from 2014-15.
• ALGA’s 2023-24 Pre-Federal Budget Submission called for Financial Assistance Grants to councils to be restored to at least 1 percent of Commonwealth taxation revenue.