Councils have welcomed new money revealed in this week’s Budget, but they are still being ignored on key fronts.

The 2016-17 Federal Budget indicates that Roads to Recovery funding will be increased by $50 million per year from 2019-20, confirming the continuation of the program beyond 2018-19.

But the Australian Local Government Association (ALGA) says more is needed to address the $1.2 billion annual funding shortfall to maintain Australia's local roads and to support national productivity improvements.

“ALGA has called for additional funding for the Roads to Recovery program and the extra funds indicated in the budget will be welcomed in helping to address the challenge of maintaining more than 640,000 km of local roads,” ALGA president Mayor Troy Pickard says.

“But more needs to be done to ensure the local road network has the capacity required to address access, productivity and road safety issues, especially in regional areas. Additional investment in local roads must be part of the solution to increasing transport productivity on the nation's transport network.”

The budget papers hinted that annual indexation of Financial Assistance Grants (FAGs), which will provide $2.3 billion in untied funding to local government in 2016-17, will return from 2017-18.

Mayor Pickard welcomed the indication, but wants a full public commitment to the restoration of indexation.

"The three-year pause on FAGs indexation implemented in the 2014-15 budget was unexpected and had a severe impact on the sector,” Cr Pickard said.

“We sought a specific commitment from the Government and the Opposition to restore indexation. The indication that indexation is expected to return in 2017-18 is welcome although it does not completely guarantee an end to the freeze, which will reduce ongoing funding for councils around Australia by more $300 million per year.”

The budget includes a commitment to maintain spending on infrastructure with major funding commitments in public transport identified.

ALGA recently proposed specific initiatives to address infrastructure gaps in its election plan; Local Government's Plan for an Innovative and Prosperous Australia.

The document outlines a broad range of initiatives expected to add a total of $7.5 billion to GDP and create more than 19,000 jobs over three years.

“We’re calling on all parties to consider these proposals in their election platforms,” Pickard said.