The body representing NSW councils has refuted the federal government’s claim that the abolition of the carbon tax will lead to savings that will adequately compensate their expected budget shortfalls.
Financial Assistance Grants (FAGs), which contribute significantly to council operating funds, will no longer be indexed to the Consumer Price Index (CPI). They are a target of the Abbott government’s harsh austerity measures.
After Local Government NSW (LGNSW) called for the CPI freeze be reversed, Nationals MP and deputy prime minister Warren Truss issued a press release and instead accused the media of misreporting their widely criticised policies and budget. The electorate was also blamed for its inability to understand the ‘strong action’ that was necessary to restore the budget.
Mr Truss’s media response to LGNSW said, ‘In the near hysteria that has ensued since the federal budget was announced, much has been misunderstood and misreported.’
‘The government is asking all sectors of the economy to contribute to repairing Labor’s debt and deficit disaster, and so it is only reasonable that local government should also make a contribution.’ He also claimed the CPI freeze would ‘be more than offset by the abolition of the carbon tax and the injection of infrastructure investment for local communities.’
But Local Government NSW president, Cr Keith Rhoades AFSM, told The Echo, ‘The freeze on the Federal Financial Assistance Grants will have a long-term impact on councils and communities, and will not be offset completely by the negligible savings made by abolishing the carbon tax or the ‘injection of infrastructure investment’.
‘Financial Assistance Grants are untied, which means councils can assess the individual needs of their community and put that funding into where it’s needed most. That could be infrastructure or services, other than that dictated by the federal government.
Grants stuck at 2013/14 levels
‘While populations continue to grow and the CPI continues to rise, the Federal Financial Assistance Grants will still be stuck at the same level as 2013/14. What’s more, the infrastructure funding Truss speaks about is time limited. Unfortunately, under the decision to freeze the Financial Assistance Grants, which are particularly important to regional and rural councils, [their level] will be permanently lowered.’