The NSW Country Mayors Association (CMA) has called on the Federal Government and Opposition to restore Commonwealth funding for Local Government, warning that declining financial support is placing rural and regional councils under extreme pressure.
CMA Chairman and Temora Shire Mayor, Rick Firman OAM, has urged national leaders to take immediate action, highlighting that annual Financial Assistance Grants (FAGs) provided to councils have been steadily reduced over time.
“Federal Governments of all persuasions have slowly but surely eroded the funding that is provided to Local Government. It is alarming that the annual Financial Assistance Grants (FAGs) provided to Local Government by the Federal Government have decreased from 1% of Commonwealth taxation revenue in 1996 to just 0.5% today,” Mayor Firman said.
He noted that this decline is a significant factor in the financial sustainability challenges faced by many rural and regional councils.
“Declining Commonwealth contributions, coupled with rate pegging in NSW and increasing operating costs, are making it very difficult for councils, and particularly country councils, to continue to deliver services and infrastructure at the levels our communities need,” he said.
CMA Deputy Chairman and Bega Valley Shire Mayor, Russell Fitzpatrick, echoed these concerns, stating that inadequate federal funding is forcing councils to implement large rate rises at a time when many residents are already struggling with cost-of-living pressures.
“The inadequate FAGs situation creates large rate rises across rural and regional NSW Local Government Areas during a cost-of-living crisis, as councils struggle to remain financially sustainable. While country councils know their communities are doing it tough, their operating costs have also risen much faster than their revenue over consecutive years,” Mayor Fitzpatrick said.
He explained that in some rural councils, grants account for over 70% of their revenue, meaning even substantial rate increases do little to bridge funding shortfalls. “Their rate base is stagnant. So, even rate hikes cannot help them much,” he added.
To address the issue, the CMA has written to Prime Minister Anthony Albanese, Opposition Leader Peter Dutton, and Nationals Leader David Littleproud, requesting one-on-one meetings to discuss the funding crisis. The association has also invited them to speak at its next meeting on 28 March, which will focus on financial sustainability.
Mayor Firman emphasised that rural and regional councils face unique cost pressures, with many responsible for maintaining vast areas of infrastructure, including nearly 1,500 kilometres of roads in some cases.
“In many of our 87 member council LGAs, there is little or no public transport, making it almost impossible to consolidate service delivery in centralised locations to cut costs.
“Our board and our members are committed to ensuring that those who choose to live and work in country NSW have the services and infrastructure available that validates that choice. It’s all about equity,” he said.
The CMA is calling on both the Government and Opposition to commit to restoring FAGs funding to 1996 levels, which they argue would significantly improve financial sustainability for councils not just in NSW but across the country.
“We are asking the Commonwealth and Opposition to please step up to the plate, to support our members in providing the services and infrastructure that our communities need and deserve,” Mayor Firman said.
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