Federal parliament inquires into council sustainability, challenges

In a new inquiry, the House of Representatives Standing Committee on Regional Development, Infrastructure and Transport is examining local government sustainability.

Municipal Association of Victoria (MAV) president David Clark said federal funding was "absolutely crucial," for local government, as most of the sector's funding - apart from rates - came from the commonwealth.

"That's really the key issue, the state government makes our rules and affects how we do things, but the "feds" are where the money comes from.

"That's particularly the case for rural councils, were about 40 per cent of our money comes from Financial Assistance Grants (FAG) and Roads to Recovery funding."

Standing committee chair Northern Territory Labor MP Luke Gosling said the inquiry had prioritised a "deeper understanding of local government financial sustainability and funding frameworks, alongside the changing infrastructure requirements and service delivery obligations for local governments".

"The committee is seeking to understand the challenges faced by local governments in servicing infrastructure requirements across Australia's regional, rural, and remote locations," Mr Gosling said.

The committee was aware of significant public infrastructure workforce shortages, particularly in local government areas, and the importance of promoting skills development and job security for Australians.

The timing of the inquiry could be read two ways, Cr Clark said.

"One is are they trying to get it out of the way and get it done, given we are due for an election within the next 12 months, or is it actually a way of helping inform the government?"

Last year's Grattan Institute report on roads funding had made "really, really clear observations" on funding priorities and how the money flowed from the federal government, he said.

"I think that type of work will have a substantial impact on this inquiry, in terms of what the government thinks they need to look at," he said.

He hoped the inquiry outcomes would guide policies, formulated and presented by both the government and opposition, in the lead-up to the next election.

Victoria was best served by the FAG's, as it had more people in a smaller area - "I don't think any of councils are flush with money," he said.

"The concept of continuing a per-capital model, we believe, is logical.

"The argument we have made at the national level is that we are always happy for a review, but we need to see some more money on the table."

Governments were mistaken if they believed "everybody would be happy" if they approached the issue believing it could be covered by a redistribution of the current funds, he said.

Rural Councils Victoria (RCV) chair Mary-Ann Brown said the organisation would also be preparing a submission for the inquiry and hoped to give an in-person presentation.

RCV was surveying members on their key concerns when it came to their financial position, she said.

"About six years ago, the state government commissioned a report on the financial sustainability of councils and it identify there were 13 rural councils at serious financial risk," she said.

Rural Councils had also looked at alternative sources of income.

"That looked nationally and internationally and basically it said there was no silver bullet, for rural councils," she said.

That was supported by the Grattan Institute report.

"We have to keep raising the issue - the intent of the FAG's was they would originally be 1 per cent of tax revenue: I think they are currently sitting at something like 0.6pc of tax revenue," she said.

FAGs needed to be boosted and some of the rules around them needed to be examined, Cr Brown said.

Further information on the inquiry, including the terms of reference and how to contribute, is available on the Committee's website.