Councils feel the brunt of funding cuts

(Media release courtesy of Municipal Association of Victoria)

Victorian councils will feel the harsh impact of the freeze on Federal Financial Assistance Grants, with a total of $5.65 million missing from the first quarterly payments set to arrive this week.

The callous freeze on indexation was announced in the Federal budget in May. Based on Commonwealth budget estimates, $139 million will be ripped from councils statewide over three years. Twenty-four million will be cut from the first quarter’s payment of vital grants to councils nationwide.

The Municipal Association of Victoria President, Cr Bill McArthur, said many councils would be shocked when they discovered the reality of the freeze this week.

“We have known since May that these cuts were coming, and some councils have had to take extreme measures, like scaling back road maintenance and other council services, to make up for the shortfall. In rural areas the grants provide up to 31 per cent of total funding, so rural communities will suffer a massive blow.

“Councils are responsible for $73 billion worth of infrastructure and Financial Assistance Grants have boosted councils’ capabilities to fund this vital infrastructure, maintain 85 per cent of the state’s road network, and pay for crucial community services like libraries, swimming pools, and parks.

“These cuts will force councils to reassess their budget options. Some councils may increase rates, but regardless this funding loss leaves communities vulnerable to scaled back services, and potentially deteriorating infrastructure.

“This year’s Community Satisfaction Survey showed that communities were split when it came to cutting back services or increasing rates to raise revenue.

“At a time when we know the asset renewal gap has reached $225 million, confirmed in February by the Auditor General, it’s a shame that these funds have been stripped from councils by the Federal Government.

“The MAV has been working hard with councils to actively voice our opposition against the freeze, and last month we established a Financial Assistance Grants taskforce. The taskforce includes councillors and officers from rural and metropolitan councils, and aims to guide the MAV’s response to the cuts.

“All 79 councils in Victoria have banded together against the freeze, with councils agreeing to lobby the Commonwealth to seek a reversal of the decision, and join the Australian Local Government Association’s national campaign against the cuts, as voted on at our May State Council meeting.

“The MAV will continue a push against the freeze, in the hope that it will be revoked,” Cr McArthur said.