Budget 2020-21: What it means for the Local Government Sector

This year’s Federal Budget has addressed many of the priority issues that ALGA has been advocating and campaigning for over many years. 

Moreover, the Budget has effectively maintained the level of Financial Assistance Grants, despite the significant economic impact of the coronavirus pandemic.

With declines in Commonwealth tax revenue, population growth and the Consumer Price Index (CPI), there was a risk FAGs could be reduced significantly. 

This did not occur, however – an acknowledgment of the important role that local governments will play in recovery. 

Further recognising our essential role in supporting local communities, employment and businesses, and cumulatively national economic recovery, the Federal Government has provided a further $1 billion under the Local Roads and Community Infrastructure Program. 

This will have the added benefit of helping to address significant local government infrastructure backlog. 

The regions will benefit from a range of new policy
announcements, including $100 million to fund Regional Recovery Partnerships, and
a $550 million investment in
the Stronger Rural Health Strategy.

A further $200
million is being provided to extend the successful Building Better Regions Fund
(BBRF) for a fifth round, including $100 million available across regional
Australia for community priorities; and $100 million dedicated for
tourism-related infrastructure.

Whilst
tourism benefitted from the Budget, arts and culture failed to feature. Funding
for natural disasters has effectively been placed on hold with the Government
waiting for the findings of the Royal Commission into National Natural Disaster
Arrangements before potentially announcing any new measures.

ALGA’s advocacy has resulted in councils being eligible for the Boosting Apprenticeship Commencements program. This is an opportunity for councils to start addressing skill gaps and the sector’s ageing workforce profile. 

THE BUDGET AT A GLANCE

$1 billion of new investment in local roads and community
infrastructure, building on the $500 million Local Roads and Community and Road
Infrastructure (LRCI) program announced in May.

$2 billion of new investment in road safety initiatives.

$2 billion in funding for water infrastructure

$1.2
billion in wage subsidies to boost apprenticeship starts

FINANCIAL ASSISTANCE GRANTS

The 2020-21
Budget maintains the system of payments to support local government, through
Financial Assistance Grants (FAGs).

In 2020-21
the Commonwealth will provide $2.54 billion in FAGs funding. This includes $1.3
billion which was brought forward from the 2020-21 estimate and paid to states
and territories on 25 May 2020.

The FAGs as
a proportion of Commonwealth Tax Revenue in 2020-21 is therefore estimated to
be 0.6 percent. This is higher than the 0 .55 percent estimate in 2019-20
because of expected lower Commonwealth revenue

FAGs
continue to comprise two components: general purpose assistance grants; and
untied local roads grants.

ROADS AND TRANSPORT

Roads to
Recovery: 

$400
million of extra funding to support the extension of the Roads to Recovery
Program by an additional year.

Road
Safety:

$2 billion for road safety to support the next National Road Safety Strategy 2021-2030. The program will be delivered in three, six-month tranches and on a “use it or lose it” basis. It will fund projects such as treatments, cycleways, road-sealing, shoulders, barriers and audio-tactile line markings (ATLM), with NSW to receive $540 million, Victoria $340 million, Queensland $522 million, WA $284 million, SA $168 million, NT $96 million, Tasmania $44 million, and the ACT $6 million.

The funding will go to the state and territory governments primarily, but there is the possibility that some money will flow through to local road projects. 

$5.5
million to be invested in establishing a National Road Safety Data Hub to
assess the effectiveness of road safety efforts by all Australian governments in
moving towards the nationally agreed target of zero fatalities and serious
injuries by 2050.

Bridges
Renewal Program:

$290
million under Round 5 of the Bridges Renewal Program (BRP) and Round 7 of the
Heavy Vehicle Safety and Productivity Program (HVSPP).

Black
Spot Program:

$110
million in 2020-21.

SA Local
Road Funding Anomaly:

Funding
provided in 2019-20 Budget

Transport
Infrastructure:

$7.5
billion in new investment in national and state arterial roads, with some of this funding
potentially flowing to projects on local roads including:

• $40 million for the freight vehicle productivity improvement program in WA and Wheatbelt timber bridge replacement of $11 million.
• $135 million for Roads of Strategic Importance (ROSI) in WA.
• $60 million for Roads of Strategic Importance (ROSI) in Queensland.
• $12 million for freight bridge upgrades in Tasmania;

AIRPORTS

Regional Airline Network Support (RANS) program to be extended until 28 March 2021, and The Domestic Aviation Network Support (DANS) program to be extended until 31 January.

COMMUNITY INFRASTRUCTURE

An additional
$1 billion for local governments for the Local Roads and Community
Infrastructure Program. This builds on the initial $500 million announced in
May 2020.

$28 million
for a sixth round of the Stronger Communities Fund to finance small capital
projects.

$100
million over two years for Regional Recovery Partnerships with
states/territories.

INFORMATION AND COMMUNICATIONS TECHNOLOGY

Smart
Communities (Digital):

$28 million
over four years to extend the Be Connected Program helping older Australians
acquire digital skills.

Broadband:

NBN Co to
set aside $300 million of co-investment funding for NBN Co to partner with
governments and local councils to further improve broadband services in
regional Australia.

Additionally,
NBN Co will invest $700 million to enable nine in 10 businesses to order
highspeed fibre broadband at no upfront cost as NBN Co rolls out 240 Business
Fibre Zones across the country.

Regional
Connectivity:

$30.3
million in additional funding for the Regional Connectivity Program to improve
connectivity in regional and remote Australia.

Up to $1.8 million in grant funding for Wireless Internet Service Providers to improve connectivity in the Western Australia Wheatbelt.

Cyber
safety:

$39.4
million in new funding for the Federal eSafety Commissioner to continue its
work protecting Australians from online harms.

NATURAL DISASTER

The Government says it will await the findings of the Royal Commission into National Natural Disaster Arrangements before potentially announcing any new measures.

Funding for
the National Aerial Firefighting Centre to be boosted by $11 million each,
indexed annually.

The National Bushfire Recovery Agency established by the Commonwealth in response to the severe impact of the 2019-20 bushfires has delivered $1.2 billion of $2 billion committed for recovery assistance to support households, businesses, and communities impacted by the bushfires.

Flood
and drought:

$155.6
million over four years to support drought and flood-impacted communities,
including:

• $50.0
  million in 2020-21 to extend the On-farm Emergency Water Infrastructure Rebate
  Scheme,
• $19.6
  million in 2021-22 to extend the drought function of the National Drought and
  North Queensland Flood Response and Recovery Agency for a further year to
  continue coordination and community engagement for the Government’s response
  and recovery activities; and
• $86.0
  million over four years from 2020-21, through the Future Drought Fund, to
  establish eight Drought Resilience and Adoption Hubs that support networks of
  researchers, farmers, agricultural business and community groups to enhance
  drought resilience practice, tools and technology.

$60 million
to be invested in the 2019 Monsoon Trough: A strategy for long-term recovery to
provide a blueprint for recovery from and resilience against future economic
shocks because of natural disasters.

ENVIRONMENT AND CLIMATE CHANGE

Environment, Parks and Heritage:

$233 million to be invested in upgrading facilities in Commonwealth National Parks, including Uluru, Kakadu, Christmas Island and Booderee National Park.

$12 million
in national park licence fee and entry fee waivers to replace revenue foregone by
tourism operators.

$36.6 million over two years to
maintain the timeliness of the Environmental Assessment Process.

$269.6 million over four years
for the Murray Darling Communities Investment Package.

Climate
Change:

No announcements.

CIRCULAR ECONOMY

$249.6
million investment to drive a billion-dollar transformation of Australia’s
waste and recycling capacity.

This will
fund initiatives such as the new Recycling Modernisation Fund, the National
Waste Action Plan, national waste data systems, and the implementation of the
Federal Government’s waste export ban.

Recycling
and clean energy also named as one of six national manufacturing priorities,
with support from a $53 million expansion of the $1.3 billion Manufacturing
Modernisation Fund.

WATER INFRASTRUCTURE

$2 billion
in additional funding to be provided for projects through the National Water
Infrastructure Development Fund, bringing to $3.5 billion money to be invested
in projects delivering increased water security for the regions.

The fund will become a 10-year rolling program of priority water infrastructure investments, including identifying and building new dams, weirs, pipelines, water recycling plants and other projects that will deliver the National Water Grid – a series of region-specific systems to help secure reliable supplies of water for rural and regional Australia.

TOURISM

$250 million for a Regional Tourism Recovery Package designed to aid nine regions reliant on international tourism.

$231.6
million to Tourism Australia for 2020-21 to ramp up domestic marketing
activities and initiate new campaigns to again attract international visitors
when overseas travel resumes.

$100
million over two years will go towards Regional Recovery Partnerships to
coordinate investments with other levels of government and support recovery, diversification,
and growth in 10 regions across Australia such as the Snowy Mountains, Kangaroo
Island, and the Hunter.

$51 million
in additional funding to Commonwealth’s Regional Tourism Recovery initiative to
assist tourism regions reliant on international travellers to pivot to the
domestic market by adapting their products, experiences, and marketing
strategies.

REGIONS

• $200
  million in additional funding to extend the successful Building Better Regions
  Fund (BBRF) for a fifth round, including $100 million available across regional
  Australia for community priorities; and $100 million dedicated for
  tourism-related infrastructure;
• $100
  million to fund Regional Recovery Partnerships, which will coordinate
  investments in regions with other levels of government to support recovery and
  growth;
• $30.3
  million in additional funding for the Regional Connectivity Program to support
  telecommunications projects developed by local communities and providers to
  benefit regions:
• $41.0
  million for a Research and Development Program to continue the Government’s
  regional decentralisation agenda, by funding research and development
  activities that will benefit regional industries;
• $28.1
  million in additional l funding to extend the Stronger Communities Program,
  which provides grants of between $2500 and $20,000 across the country to
  community organisations and local governments for small capital projects that
  deliver social benefits for local communities; and
• $5.7
  million to be invested in a new Building Strong, Resilient Regional Leaders
  initiative.
• $550
  million investment in the Stronger Rural Health Strategy to give doctors more
  opportunities to train and practise in rural and remote areas;

CITIES

City Deals:

$327.5 million to be provided to support projects under the new Perth City Deal focused on reactivating and revitalising the Perth CBD.

$246
million in ongoing commitment to the delivery of City Deals in Townsville,
Darwin, Western Sydney, Hobart, Launceston, Geelong and Adelaide.

SKILLS

$1.2
billion new investment to create new apprenticeships. Businesses and
organisations (including Local Government) will be eligible for a 50 percent
wage subsidy under the Boosting Apprenticeship Commencements program for the
period 5 October to 30 September 2021.

This
measure is in addition to the $2.8 billion Supporting Apprentices and Trainees
package for existing apprentices and trainees.

OTHER MEASURES IMPACTING ON LOCAL GOVERNMENT

• $60 million investment in “safe places’’ initiative to provide 700 new places for women and children escaping domestic violence;
• $35 million over four years for the Safer Communities Fund Round Six;
• $63 million over five years for social cohesion and to enhance engagement with multicultural communities;
• $314 million in additional Covid-19 support for Victorian childcare providers;
• $100.8 million over two years to support mental health;
• Jobmaker – Investment in New Technologies $1.9 billion over 12 years – including microgrids in regional and remote communities;
• Northern Australia Infrastructure Facility – $36.9 million over four years; and
• Closing the Gap $10.1 million for dashboard; $46.5 million over four years to support capacity-building in Aboriginal community-controlled organisations to meet targets set out in the new Closing the Gap agreement.

Policy decisions previously published in the July 2020 Economic and Fiscal Update:

• Drought
  Response $2.2 billion over five years;
• COVID -19
  Response Package – Aviation Support of $1.9 billion over four years from
  2019-20;
• COVID-19
  Response Package – Relief and Recovery Fund:  $1 billion over two years;
• National
  Bushfire Recovery Fund – $2 billion over four years;
• Bushfire
  Response Package – disaster recovery funding arrangements of $109.6 million in
  2019-20;
• COVID Response
  Package – communications, cyber safety and the arts – $676.8 million over nine
  years;
• COVID Response
  Package – freeze and maintain the Heavy Vehicle Road User Charge; and
• COVID Response
  Package – infrastructure stimulus – $2 billion over three years for priority
  regional and urban transport infrastructure.