Minute With The Mayor - Mayor Ramon Jayo

Concerning news out of Canberra last week was the Federal Government’s proposal to reduce federal funding for the Disaster Recovery Funding Arrangements to 50% for natural disaster events.

The apportionment of costs between the Federal and State Governments has historically been around a 65/35% split for larger infrastructure reconstruction funding arrangements.  

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For each disaster event, Local Government is required to meet an upfront cost of $130,000, which for a small council like ours — often in the firing line of Mother Nature — places an immediate and substantial financial burden on limited resources.  

Councils also carry additional unfunded or partially funded recovery costs, may be required to contribute 20% or more towards betterment works, and are forced to absorb ongoing cash‑flow and insurance pressures.  

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We are yet to hear what impact the proposed changes will have, but they will undoubtedly result in a reduction in funds flowing from the Federal Government, and we will need to see whether the State will pick up that reduction or whether it will flow through to the ratepayer. For a small local authority like ours, with a small rate base and small population, this is simply an additional cost imposition that we cannot afford, and we will need to argue strenuously against it.

These support mechanisms have traditionally been in place to recognise that Local Government in Australia collects just 3% of the nation’s total taxation revenue. The Commonwealth Government is the dominant collector, raising roughly 81% of all national tax revenue, while State Governments recover the remaining 16%.

The 3% recovered by Local Government is derived entirely from property taxes, known as rates.

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While councils raise only a tiny fraction of the total tax pool, they are responsible for a significant burden of local expenditure, managing nearly one‑third of all public infrastructure assets. These are the very assets required to be repaired or reinstated under the Disaster Recovery Funding Arrangements.

We have already seen a reduction in funding available from the Federal Government for betterment works. Betterment is grant funding made available to councils, on successful application, to reinstate assets to a stronger and more resilient standard rather than replacing them on a like‑for‑like basis.  

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This funding was previously provided by the Federal Government in full; however, councils are now required to contribute 20% of total costs. To make matters worse, our residents are finding it increasingly difficult, if not impossible, to maintain adequate insurance to protect their property due to ever‑rising insurance premiums.

Councils and communities are already grappling with the impacts of a high cost of living driven by inflation, high fuel prices and, for the farming sector, high fertiliser costs.

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In all fairness, it must be acknowledged that councils do receive funding from the Federal Government each year through Financial Assistance Grants. However, this funding is failing to keep pace with CPI increases and has, in real terms, been significantly reduced over the past 10 years.  

It has now fallen to less than 0.5% of total national tax revenue, down from a high of 1%.

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As indicated several weeks ago, we did not receive any assistance from the Budget, nor any meaningful policy direction such as an ethanol mandate or incentive that could help deliver new manufacturing opportunities and economic development for our region.

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Unfortunately, councils are being asked to do more with less. This is simply unsustainable.

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