Part 2: Payments for Specific Purposes (Continued)
Financial assistance grants to local government
The Commonwealth is providing a financial contribution through State governments for the provision of local government services to the community. In 2011‑12, payments for local government services will total $1.6 billion, which includes a decision by the Commonwealth for $536.6 million to be brought forward from 2011‑12 to be paid in 2010‑11. The Commonwealth will conduct a review into the equity and efficiency of the current funding provided through the Financial Assistance Grants program. This review is to be completed in 2012‑13.
Table 2.12 provides information on payments to support local government.
Table 2.12: Payments to support local government
Financial assistance grants
The Commonwealth has provided general purpose assistance to local governments since 1974‑75.
Current arrangements for financial assistance grants are made up of general purpose assistance and untied local roads grants. General purpose assistance is the larger of the two components of the financial assistance grants and is distributed between the States on a per capita basis, while untied local roads grants are paid on the basis of 1991‑92 interstate road shares.
The financial assistance grants are adjusted annually, based on an escalation factor that the Treasurer determines with reference to population growth and the consumer price index.
These grants are paid to State governments, after which State grants commissions determine the intrastate distribution of the financial assistance grants between local governments. Both forms of funding are untied and can be spent according to each local government's own priorities.
The Commonwealth delivered funding to Queensland for the financial assistance grants earlier than scheduled in 2010‑11 to assist regional and remote local governments in employing people to perform important clean‑up and repair work following the Queensland floods and Tropical Cyclone Yasi. Similar flood related payments were made to Victoria.
Furthermore, the Commonwealth will pay the first quarter instalment of the expected 2011‑12 allocation in 2010‑11 so that local governments have immediate use of the funds. This will provide local governments with additional flexibility and assist them in responding to the widespread natural disasters in 2010‑11 and other pressures. This measure is discussed in Local government payments — accelerating payments as part of Budget Paper No. 2: Budget Measures 2011‑12.
Additionally, since 2004‑05 the Commonwealth has been providing supplementary funding direct to local governments in South Australia for local roads. South Australia will receive $16.2 million for this purpose in 2011‑12.
The continuation of supplementary funding to South Australia is part of the new spending measure Supplementary funding for South Australian local roads — continuation taken in the 2011‑12 Budget. This measure is discussed in Budget Paper No. 2: Budget Measures 2011‑12.
Distribution of financial assistance grants to local government(a)
- This table does not include the supplementary funding to South Australia included in table 2.12.
- The 2010‑11 estimate takes into account an underpayment of $25.4 million in 2009‑10. A cash adjustment for any overpayment or underpayment will be made to payments for the 2011‑12 financial year when the Treasurer determines the final 2010‑11 escalation factor in June 2011. This ensures that local governments receive their correct entitlement for each financial year in accordance with the final escalation factor.
- Financial assistance grants in 2011‑12 are calculated on the basis of an estimated escalation factor prior to the Treasurer determining the final factor in June 2012.
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