FAGS funding for rural local governments substantially more than for those in city

14/9/99
Country local governments received substantially more per capita from Financial Assistance Grants than those in the city, Local Government Minister Paul Omodei said today.
The metropolitan and fringe metropolitan councils between them accounted for 73 per cent of the State's population and received 26 per cent of the Financial Assistance Grants (FAGS) recently approved by himself and the Federal Minister, Senator Ian McDonald.
The grants were allocated according to a complex formula with elements required by the Commonwealth and others established by the State Local Government Grants Commission.
There were two main components - equalisation grants and local road grants.
For equalisation grants, the Grants Commission created a set of criteria to establish each council's capacity to raise revenue and its costs to administer theoretically equal services.
The gap between these two figures represented its grant entitlement.
However, before this formula could be applied, there was a Commonwealth requirement that each council receive a minimum per capita payment, regardless of whether the council had any need for grants under principles of equalisation.
Most metropolitan councils received the minimum payment only. However, because of population growth, most received an actual increase in their total grant each year.
After the minimum payment, the balance was allocated on the principles of equalisation.
The road grants were based on the actual cost of maintaining the existing roads within a local government area, except that about seven per cent of the money was retained and distributed for maintenance of bridges and Aboriginal community access roads.
The result was that the average per capita payments in different regions in 1999-2000 were:

• inner metropolitan - $14.37;
• fringe metropolitan - $19.15;
• regional centres - $41.94;
• South-West - $76.44;
• Wheatbelt - $189.70;
• Pastoral and Mining - $389.55;
• Pilbara - $159.88; and -
• Kimberley - $279.48.

Mr Omodei said that within any region, it was possible that some councils would have received an increase in grants compared with last year and others a decrease.
The high level of dependence on grants among some country local governments was a matter of concern.
Councils would need to consider this factor carefully when assessing the future structure and administration of local government within their own area and within their region.
"About a quarter of local governments, all of them in the country, are dependent on FAGS for more than 50 per cent of their revenue," Mr Omodei said.
"This is a serious change in local government's autonomy and self-reliance, particularly when we remember that just over 20 years ago there were no such grants."
Media contact: Hugh Ryan 9213 6700