May 29, 2014

Abbott creates pressure for council rate rises

A senior Australian Government official has confirmed Australia’s local councils will lift rates or reduce services because of Tony Abbott’s Budget senseless funding cuts.

While claiming to have lifted road funding in the Budget, Mr Abbott’s Budget decision to freeze indexation of financial assistance grants from July 1 will rob councils of more than $900 million they now use for local road maintenance and the provision of services.

At a Senate Budget Estimates committee hearing this week the Secretary of the Department of Infrastructure and Regional Development, Mike Mrdak, conceded that the decision would place new pressure on councils.

I imagine in light of the Budget that local government – each individual council – will be looking to see how they need to reshape their budget in terms of no longer having access to that indexation factor.

Mr Mrdak’s comments echo those of the Local Government Association of Australia, which warned last week that councils would have to re-evaluate their Budgets because of the freeze.

“Mr Abbott’s first Budget not only includes massive cuts to Commonwealth spending, but seeks to shift political blame to other levels of government.” Mr Albanese said.

“While the Government insists on the need for spending cuts, it asks other levels of government, including small rural councils, to do the heavy lifting.”

The Shadow Minister for Regional Development and Local Government, Julie Collins, said there would be a disproportionate impact on smaller regional and rural councils with their heavier reliance upon FAGs to maintain roads.

“How does Tony Abbott think smaller regional and rural councils will sustain their level of services to rate payers?,” Ms Collins said.

“This Budget has been designed for other levels of government to bear the financial burden and local councils and their rate payers have not been spared by Tony Abbott’s cuts.”

Councils, particularly small councils in rural and regional areas, rely upon FAGs to maintain local roads and Mr Abbott is asking them to lift the rates burden on ratepayers to fund his cuts.