These grants are the State's entitlement for financial assistance from the Commonwealth Government, paid in equal quarterly instalments for a financial year, under the Local Government (Financial Assistance) Act 1995.
The distribution of Financial Assistance Grants is for local government purposes and aims to achieve equitable levels of services by reasonable effort.
Western Australia's share of Commonwealth funding for 2019-20 is $301.1m ($299.3m after adjustments) which is 11.87 per cent of the national allocation of $2.536b. This allocation has increased from $293.3m in 2018-19.
Minimum grant local governments received $21.03 per capita.
The funding is untied, there are no conditions on how the funds should be spent. The amount is divided into two parts, a general purpose component and a local roads component.
The WA Local Government Grants Commission (grants commission) is responsible for making recommendations to the Minister for Local Government on the allocation of Financial Assistance Grants.
Provision of funding to local governments
The funding provided to local governments is allocated on the basis of horizontal equalisation to ensure that each local government in the State is able to function at a standard not lower than the average standard of other local governments.
All local governments are entitled to receive at least the minimum grant. That minimum grant cannot be less than 30 per cent of what the local government would receive if all grants were allocated on a per capita basis.
The balanced budget approach has been used to calculate General Purpose Grants since 1994. The grants commission calculates the equalisation requirement of each local government by assessing the revenue raising capacity and expenditure need of each local government. Five categories (called standards) are used to calculate revenue raising ability and six categories are used to establish expenditure needs.
The equalisation requirement is the difference between the assessed expenditure need and the assessed revenue raising capacity of each local government. The grants commission has developed a range of cost adjustors (for example: location, population dispersion and socio-economic disadvantage) and these are included in calculating the standards to recognise the additional costs a local government faces due to its physical or demographic characteristics.
Asset preservation model
The grants commission uses an asset preservation model for local road funding. This model is used to assess the cost of maintaining a local government’s road network and takes into account annual and recurrent maintenance costs and the costs of reconstruction at the end of a road’s useful life.
The grants commission is required to keep up with the changes in local government to ensure that its methods reflect the operations of the industry.
As part of this process, it visits about 30 local governments each year to hold public hearings that provide an opportunity for local governments to inform the grants commission of the issues they are facing.
The grants commission also receives submissions from local governments seeking modifications to the grant determination process so that it will reflect their needs more effectively.
The grants commission requires all local governments to complete the Information Return to facilitate the processes for allocating Financial Assistance Grants. The 2019-20 Financial year Information Return's will be sent out to local governments in October 2020 and will be due by close of business on Sunday, 31 January 2021.
Completed returns and/or queries can be emailed to firstname.lastname@example.org.