Members of the Organisation for Economic Co-operation and Development accept that countries need competitive dynamic regions to achieve their economic, social and environmental objectives and to be successful into the future.
Yet, there is clear evidence of growing inequality in Australia’s regions, particularly around the long-term financial sustainability of rural and remote regions.
A perfect storm of rate-capping, cost-shifting and diminishing federal grants is intensifying this inequality and threatening our unity and productivity as a nation.
Recent State of the Regions reports, commissioned by the Australian Local Government Association, confirm the worrying tale of inequity across some of the economies in Australia's regions.
Findings of a widening gap in employment rates, household incomes and productivity between and within Australia's regions highlight the economic struggles of some regions.
What’s more, rural and remote councils also face unsustainable pressure on their public pockets.
Although, collectively, local governments are almost up to 90 per cent self-funded, many rural and regional councils do not have the same revenue opportunity as their urban and larger regional counterparts and are much more reliant on external funding sources.
Particularly Financial Assistance Grants from the Commonwealth which, since the early 70s, have aimed to allow regional councils to provide a similar level of services and infrastructure as their urban counterparts.
Except it’s not happening.
The 2018 State of the Assets report reveals local government’s infrastructure backlog has blown out from $27 billion in 2015 to $30 billion, despite welcome Roads to Recovery funding.
Alarmingly, 22 per cent of the nation’s timber bridges are in poor to very poor condition, despite the Commonwealth’s recent Bridges Renewal program.
These deficiencies not only create a financial backlog, they present road safety risks and a block to efficient freight movements because, notably, the vast majority of local government’s 622,000-kilometre road network is in the regions.
We need bipartisan commitment at the federal level to fairer core funding, in addition to targeted partnerships to eliminate safety blackspots, improve freight productivity and get on top of the ever growing backlog.
As its top federal election priority, ALGA has called for all parties, independents and individual candidates to commit to restoring core funding for local government, Financial Assistance Grants, to 1 per cent of Commonwealth taxation revenue.
Financial Assistance Grants are untied funds provided to councils by the Commonwealth that councils use to provide services for their communities – such as parks, swimming pools and libraries – and critical infrastructure works like road repair, resealing and reconstruction.
These grants play an important role in the financial sustainability of every council; however, the need is particularly evident in rural, regional and remote councils which are up to 90 per cent reliant on the Commonwealth for their core revenue.
Despite the importance of these grants, the past 20 years have seen their steady decline to what is now a critical point.
In 1996, Financial Assistance Grants were equal to around 1 per cent of Commonwealth taxation revenue but this has steadily diminished to only 0.55 per cent today.
In the case of Victorian councils, this means a loss of around $490 million in funding each year.
The deterioration of this core funding has not only made it harder for our regional councils to maintain roads and bridges in their communities, it is reducing their services and relative living standards.
If that wasn’t bad enough, the decline in Financial Assistance Grants has been accompanied by endemic cost-shifting onto councils by state and federal governments withdrawing their funding for some services, or imposing new obligations, and leaving councils to pick up the bill.
And let’s not forget the imposition of rate-capping which denies councils the opportunity to raise additional revenue to respond to cost-shifting or dwindling grants.
Urgent policy action from the Commonwealth is now essential.
Our sector needs a commitment to restore Financial Assistance Grants funding levels back to at least 1 per cent of Commonwealth taxation revenue.
The level of funding provided to councils, the sphere of government closest to the community, must be adequate so that our councils can ensure infrastructure and services are provided at a reasonable level in their community.
Regional councils, in particular, can no longer continue to be left behind.
They need commitment, leadership and core funding security now.