Councils are pushing Federal Treasurer Scott Morrison to restore indexation to Financial Assistance Grants (FAGs) in the Budget on May 3.

The FAG payments to local government from the Commonwealth are vital for councils across the country.

Local Government NSW (LGNSW) president Keith Rhoades says the indexation freeze imposed by the Abbott Government in 2014 had already deprived NSW councils of almost $260 million.

“These untied grants are a vital part of local government’s revenue base, allowing the provision and maintenance of community infrastructure such as local roads, swimming pools and libraries,” Cr Rhoades said.

“They are particularly critical to rural and regional councils, many of whom don’t have the residential rating base, or revenue opportunities such as car parking, to fill the gaps.

“The three-year freeze has had a harsh impact on NSW councils – and that impact is ongoing, because the freeze has resulted in a permanent base reduction of around 13 per cent.”

Due to a relatively small rate base, with minimal shift in population and limited opportunities to increase its rate base, Queensland’s Balonne Shire Council is particularly reliant on FAGs, which make up an estimated 25 per cent of its annual recurrent revenue.

Rural and remote councils in Queensland are facing economic stress through the rural downturn and drought conditions, so the decision to freeze the Financial Assistance Grants places further pressures on already stretched resources.

“The freeze has equated to approximately a 2 per cent rate increase each year, compounding each year the freeze was in place and locking in a permanent reduction in funding to local governments,” Balonne Shire Council Mayor Richard Marsh said.

“With budget pressure and local employment and sustainable service delivery, the freeze has placed economic and financial stress on Balonne Shire Council.”

More information is available at a dedicated site - endthefreeze.com.