A mixed bag for the nation’s councils in this year’s Federal Budget

Australia’s peak local government body says the 2026-27 Federal Budget is a vote of confidence in Australia’s 538 councils to deliver on national housing infrastructure priorities, but needs to do more to address the growing financial pressures threatening local government services across the country.

The Australian Local Government Association said councils needed better Federal support when it came to long-term, untied funding support for local communities.

ALGA President Mayor Matt Burnett said councils were on the frontline of delivering national productivity, housing growth, climate resilience and essential local services, but needed to be backed to deliver.

“We welcome the Federal Government’s trust in local government to support new housing and growing communities, through its announcement of $2 billion over four years to help deliver enabling infrastructure,” Mayor Burnett said.

“However, councils have not been given the same support to meet local community needs through secure untied funding, and in fact support through Financial Assistance Grants has gone backwards as a share of Commonwealth taxation revenue.”

Funding for local government through Financial Assistance Grants has declined from 0.51 per cent to 0.49 per cent of Commonwealth taxation revenue in this Budget.

The earlier announcement that councils can expect to receive 80 per cent of their 2026/27 Financial Assistance Grant payment this financial year will also provide much needed certainty.

Mayor Burnett said ALGA welcomed the ongoing attention on local government sustainability through the Inquiry into Local Government Funding and Fiscal Sustainability.

“Councils need secure, predictable and untied funding that can be directed towards the priorities communities need most,” he said.

“That is the only way local government can continue delivering the roads, facilities, services and resilience Australians expect in every community across the country.”

HOUSING
We welcome the commitment of $2 billion over four years to go to councils and state utilities for enabling infrastructure to support the building of 65,000 new homes.

Mayor Burnett said, “These community building blocks – roads, drainage and water, community infrastructure – are the things that make developments into communities. They make places worth living in.”

EMERGENCY MANAGEMENT
The Federal Budget has failed to deliver the investment needed to support communities facing increasingly frequent and severe natural disasters, at a time when councils are already under growing pressure from soaring fuel costs and rising demands on local services.

Mayor Burnett said councils across Australia were already under significant strain and could not continue to absorb the growing costs of disaster response and recovery.

“Communities are facing disaster after disaster, with little time to recover, at a time when budgets are already under severe pressure,” Mayor Burnett said.

SAFER ROADS
ALGA thanks the Federal Government for its continued commitment to bringing the Roads to Recovery Program up to $1 billion dollars a year, as reflected in this year’s Budget.

“This is an essential funding stream for local government,” Mayor Burnett said.

Mayor Burnett said there remained shortfall in addressing the structural funding gap for local governments, which are responsible for upkeep of close to 80 percent of Australia’s road networks.

“Councils maintain the vast majority of the roads that carry the nation’s freight to communities that need it, but we simply do not have the revenue base to maintain and upgrade it at the level required,” Mayor Burnett said.

COMMUNITY INFRASTRUCTURE:
While ALGA welcomes continued investment in community infrastructure projects, it has concerns that competitive grant processes dilute the impact of federal support and create uncertainty for councils trying to plan and deliver critical local infrastructure for growing communities.

“Councils lead on the delivery of the parks, community facilities, local roads and shared spaces Australians rely on every day, but too often they are forced into a costly and time-consuming competition process just to secure support for basic community needs,” Mayor Burnett said.

“Local government needs fair, sustainable and predictable funding streams that recognise the essential role councils play in building stronger, more connected communities.”