The federal government’s decision to freeze financial assistance grants will put a $134 million “black hole” in the budgets of councils, the Municipal Association of Victoria has claimed.
MAV president Bill McArthur said the funding blow would hurt every ratepayer, as the ‘‘core funding’’ helped councils pay for essential community services and maintain infrastructure.
Last week’s federal budget revealed grants would not be increased in line with consumer price index and population increases. The Australian Local Government Association said the loss of indexation over the next three years meant federal grants would stay at $2.28 billion per annum until 2017-18. Foregone will be $200 million in increases in 2015-16 and $321 million in 2017-18, a total of $925 million lost over the next four years.
Cr McArthur said such a significant cut in funding left councils with two choices – cut services or increase rates.
“When council budgets are set, rates make up the difference between the funding provided by other levels of government and how much it will cost to provide local services and infrastructure,” he said.
“Communities should be outraged by the federal budget’s funding freeze to councils, not just take notice when rates increase or services are cut as a consequence and councils are left to face the blame.”
