Tasmanian councils make the case for farier funding at federal inquiry

Earlier this month, LGAT President Mick Tucker and LGAT CEO Dion Lester presented to the House of Representatives Standing Committee Inquiry into Local Government Funding and Fiscal Sustainability. The Committee was interrupted by the Federal election, so this was our second presentation and follows our submission in early 2024.

In our presentation, we highlighted how the role of local government has changed over the years. Today, councils are not only responsible for managing significant infrastructure, but also for delivering a broad range of services that support people.

These services include community engagement, health and wellbeing, economic development, youth support programs, building community resilience, and responding to, as well as recovering from, natural disasters.

But while councils have evolved and adapted to meet the changing community needs, they are constrained by a funding framework that is no longer fit for purpose. The current approach of competitive and tied grant funding just doesn't work; it is creating more sustainability challenges for councils and their communities.

These grants require councils to divert resources towards seeking, reporting and acquitting these funds. They disadvantage councils in regional, rural and remote areas, as they often don’t have the resources to prepare competitive grant applications. Often despite their communities being most in need.

The principle of providing a level playing field across all communities needs to be reinforced. This can only be achieved with untied funding.

In addition to LGAT, several other Tasmanian councils presented to the Committee, all noting that our sector's responsibilities and costs have expanded beyond current funding arrangements. The main themes from the presentations were:

• Funding reform priorities
  • Support for restoring Financial Assistance Grants to one per cent of Commonwealth taxation revenue, alongside stronger indexation, greater certainty and more untied funding.
• Competitive grant inequity
  • Competitive programs were described as disadvantaging smaller, rural, regional and remote councils through high application costs, short timeframes, complex requirements, co-contributions, delays and insufficient allowance for project cost escalation.
• Tasmania needs tailored distribution
  • Tasmania’s allocation of Financial Assistance Grants does not adequately reflect its lower revenue capacity and higher service delivery costs. We need distribution measures covering geographic dispersion, island status, small rate bases, seasonal populations, asset burdens, transport costs, regional infrastructure and workforce constraints.
• Asset renewal remains underfunded
  • Grants only support new infrastructure while leaving councils responsible for existing ageing infrastructure assets. Rising maintenance costs, infrastructure backlogs, and the absence of whole-of-life funding were identified as major sustainability risks.
• Small councils carry disproportionate burdens
  • Evidence from island, remote and regional councils showed that population is often a poor measure of need. In these areas, councils may operate airports, extensive road networks, visitor infrastructure and essential services without viable market alternatives, while facing small rate bases, non-rateable land and substantial operating losses.
• Cost shifting and resilience gaps 
  • Councils are increasingly required to fill gaps involving services such as childcare, aged-care housing, medical facilities, transport, homelessness, telecommunications, tourism and airports. To address this, a need for a tripartite framework to clarify responsibilities and prevent unfunded cost shifting was highlighted.

LGAT will remain closely engaged as the Committee moves into the next stages of its deliberations. We hope the Committee’s findings will provide a strong evidence base for national funding reform and become a key advocacy plank in our continued work with the Australian Local Government Association for fairer, more sustainable and more flexible funding for Tasmanian councils and the communities they serve.