Freeze on FAG grants hurts council

THE freeze on increases to federal assistance grants (FAGs) for the next four years will impact Gloucester to the tune of $565,000, council’s general manager Danny Green said.

Council general manager Danny Green.

Council general manager Danny Green.

During council’s recent presentations on a proposal to apply for a special rate variation Mr Green repeatedly stressed how the federal government’s decision to freeze FAGs for the next four years would impact the shire.

“This is the first round of grants since the Australian government announced in May it would not be raising the grants in line with the CPI (consumer price index) or population increases,” he said. 

“This will result in a shortfall of $30 million to NSW councils this financial year and a projected shortfall of $288 million over the next four years. 

“Gloucester Council will be impacted by $565,000 over this period.”

Last week Lyne MP David Gillespie announced Gloucester would receive $2.2 million in federal assistance funding for the 2014-15 financial year.

Mr Green was quick to point out the funding was not a new income source for council, nor was it additional funding for the service provider.

“FAG grants have always been routinely included in our annual revenues and projected into long term financial plans,” Mr Green said.

“These plans reflect our strategic objectives and informed our analysis of the huge gap in our ability to fund the infrastructure renewals and maintenance backlog.”

Since 1974, all councils Australia-wide have received funding from the federal government in the form of FAGs. 

The grant program consists of a general purpose component and a local road component. 

Both are untied in the hands of local government, allowing councils to spend the grants according to local priorities.

“These funds have naturally formed a significant portion of Gloucester Council’s revenue for many years and are incorporated in our routine budgets to support other revenues from fees, charges and rates to deliver services,” Mr Green said. 

“For the current financial year we budgeted $2.148 million and have just been advised that we will receive $2.219 million.”

Gloucester will receive some additional funding from the federal government this financial year with the Commonwealth finally signing off on a $17-million commitment to upgrade the Bucketts Way.

The funding was secured by former Lyne MP Rob Oakeshott before the last federal election.

Funding for the project will be jointly shared between Gloucester and Greater Taree City councils.