Budget 2017: Implications for local councils

Public servants and local councils are hoping Treasurer Scott Morrison’s ‘good news’ Budget really is.
Pic: YouTube.



Housing affordability, a staged unfreezing of the Medicare rebate, infrastructure spending and Gonski 2.0 are all widely tipped to feature prominently in Treasurer Scott Morrison’s “good news” Budget tomorrow.

Other likely announcements include a one-pay payment for pensioners to offset electricity price increases, funding for veterans’ mental health programs and dumping billions of dollars worth of education and health ‘zombie’ cuts.

Meanwhile, Shadow Treasurer Chris Bowen has already called Mr Morrison’s Budget a “pale imitation of Labor policy” and said it is merely an attempt to save Prime Minister Malcolm Turnbull’s leadership by “trying to close down issues”, while warning Catholic schools will stage a rebellion against their recalculated, lower funding.

“It is designed to save Malcolm Turnbull’s leadership, desperate to get a positive Newspoll,” Mr Bowen told Barrie Cassidy on Insiders yesterday.

“These half measures: one step forward, two step back, coming down the road towards Labor policy is [not] going to fool anybody. Of course, the fact Labor’s led the policy agenda on health, education and housing affordability means the government is playing catch-up.

“Whenever someone is playing catch-up with you, that’s better than not catching up with you, but they are still a long way behind on these policies.”

But aside from the politics, what impact will the Budget have on local government and where will the inevitable spending cuts to fund the goodies come from?

Local government wish list

The biggest, most pressing issue for local government is the fervent hope that the federal government will finally end the freeze on the indexation of Financial Assistance Grants  (FAGs) to councils, a decision which Joe Hockey deferred for another three years in his horror 2014 Budget.

Regional and rural councils have borne the brunt of this measure, since they are much more dependent on FAGs for their general funding than metro areas due to their weaker rates’ base.

In April, the peak body for the nation’s local councils, the Australian Local Government Association (ALGA), mounted a social media campaign pressing the government to end the FAGs freeze, while pressing the government to increase the quantum of FAGs in proportion to Commonwealth tax revenue. In 1996 FAGs were equal to about 1 per cent of Commonwealth tax revenue; by 2013-14 FAGs amounted to around 0.67 per cent of total.

A growing infrastructure maintenance backlog, particularly in NSW, has seen ALGA request that the Roads to Recovery program should be permanently doubled, the Bridges Renewal program made permanent and Fairer Roads Funding restored for South Australia, at $17.5 million per annum.

The Association’s federal Budget submission also asked for $300 million a year over the next four years to fund community infrastructure which it said would stimulate long-term growth and build community resilience.

Disaster funding and support to address climate change is also a priority for those councils in flood prone areas. ALGA has asked for a disaster mitigation program to be established funded at $200 million per year and an investment of $100 million over four years to support councils to manage their own climate risks.

The Association also asked that the government to review municipal funding for services around indigenous housing, health, jobs and education.

ALGA President David O’Loughlin said it was “an ideal time to invest in roads and bridges, community infrastructure and guarding against the world impacts of climate change” as well as the time “to start the discussion about the reality of the current funding constraints experienced by councils”.

“ALGA understands the fiscal challenges facing the Commonwealth, however, expenditure on priorities does not wait for a convenient moment,” Mr O’Loughlin said.

“Indeed, ALGA would argue that in times of fiscal constraint governments should focus on community priorities and investment in productive infrastructure through the most efficient processes to deliver programs.”

Specific items expected in the Budget include a $2.3 billion state-federal package for Western Australia to pay for freeways, regional roads and the Metronet rail project; motorway upgrades for South East Queensland and progress on the Melbourne to Brisbane Inland Rail project, alongside $6 billion for a second Sydney airport at Badgerys Creek.

There is also likely to be an announcement of a further roll-out of City Deals, which focus on new infrastructure to help regional areas around urban centres.

It will be fascinating to discover is there is any mention of the National Party-led push to decentralise government jobs, typified by the Australian Pesticides and Veterinary Medicine Authority’s move from Canberra to  Armidale, in tomorrow’s Budget.

The cuts

One cut that has already been foreshadowed is reduced Commonwealth funding for universities, tighter rules around HECS repayments and a 2.5 per cent efficiency dividend that universities must meet. There may also be a series of smaller health programs that may be slashed or abandoned.

Meanwhile, the Community and Public Sector Union is stealing itself for yet another round of public service job cuts, predicting that a further 4500 jobs could be slashed “if the government maintains its hard-line cuts” and adds to the 18,000 scalps it has already claimed.

Instead the union is asking the government to target its money saving efforts at consultants and contractors and company tax avoidance and restore ATO jobs to prosecute this drive.

CPSU National Secretary Nadine Flood said the relative silence before the Budget had been “strange and a tad unsettling” for government workers.

“Treasurer Scott Morrison and the government in general have said much less about the national accounts than they normally would,” Ms Flood said.

“That silence hasn’t exactly been reassuring for the public servants who keep the wheels of government turning. This government has repeatedly used them as a political football while also making harsh and short-sighted cuts.

“Let’s hope the government puts ordinary Australians first with this budget, rather than shooting itself in the foot with another round of counter-productive public sector cuts.”

We’ll have to wait and see.

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