The local government sector has slammed the Federal Government's decision to freeze the indexation of Financial Assistance Grants (FAGs).

They say the decision, announced in the May 2014 Budget, has resulted in councils working with less funding this year, and in the future.

The Australian Local Government Association says that at a time when councils are already doing more with less, this move was a significant blow.

The funding provided to councils must be high enough to ensure infrastructure and service provision are effective and efficient, but FAGs funding is not keeping pace with this demand.

“This freeze will cost councils across Australia $925 million by 2017-18 and create a permanent reduction in the FAGs base of 13 per cent,”” ALGA President Mayor Troy Pickard said.

ALGA is calling for the indexation of FAGs to be restored immediately and for the Federal Government to consider the adequacy of the FAGs level for the future.

“Shortly, all councils will be asked to unite and join in this national campaign,” Mayor Pickard said.

“Specifically, councils are being asked to pass resolutions acknowledging the importance of the FAGs in the delivery of vital local services and infrastructure and ensuring that the positive impacts of these payments are publicly acknowledged.”