Inquiry into local government sustainability

This submission comes at a critical time as councils experience ongoing challenges due to insufficient funding and additional responsibilities shifted from other tiers of government.

Local government is seen as an efficient and trusted partner, often more so than federal or state levels. This recognition underscores the importance of adequate funding to maintain public trust and quality of life in South Australian suburbs and towns.

Moreover, we know councils also play a big role in economic development, including managing significant infrastructure and assets, which contributes greatly to overall national economic health.

Yet, the growing gap between escalating local government responsibilities and insufficient untied funding being provided to councils is significantly straining councils’ budgets amid increasing demands.

Read the full LGA State Submission.

South Australian submission

The LGA’s State Submission, calls on the need for increased untied grant funding for local government.

This increase is vital for councils to meet community expectations and support the growth and liveability of all South Australian communities – funding vital services, roads and infrastructure.

And unlike federal grant programs, untied funding empowers local decision-making and supports strategic decisions which align with community goals and enhance local governance and participation.

However, the value of financial assistance grants provided to local government has declined from approximately 1 percent of Commonwealth taxation revenue to around 0.55 percent over the past three decades.

This includes a decision not to index financial assistance grants at all between 2014-15 and 2016-17, which not only cost councils and their communities necessary funding support in those years but lowered the base funding for all future years.

Key recommendations

In our submission we have made 7 key recommendations, asking the Committee to:

• Acknowledge local government is the tier closest to the community and is a trusted delivery partner of the state and federal governments.
• Understand the key role the Federal Government’s Financial Assistance grants play in supporting a sustainable local government sector in South Australia.
• Recommend restoration of Financial Assistance grants to at least one percent of Commonwealth tax revenue.
• Recommend restoration of the Financial Assistance grant funding lost following the 2014-15 to 2016-17 indexation freeze.
• Adopt key principles to ensure a strong and sustainable local government sector.
• Introduce an appropriate indexation methodology to ensure Financial Assistance grants keep pace with cost pressures faced by councils.
• Acknowledge inadequate funding of local government places an unfair and inequitable financial burden on local communities and hinders the communities in delivering their needs, priorities and expectations.

Continued advocacy and next steps

LGA South Australia President, Mayor Dean Johnson has presented key challenges for South Australian councils at the Committee’s public hearing on 7 June 2024.

This has further reinforced our submission and highlighted the unique challenges for councils in our state.

We will continue to engage with Federal MPs in Canberra to advocate these recommendations.

Read the full LGA State Submission.