There has been a collective sigh of relief by councils around NSW as the decision to postpone reforms to Federal Financial Assistance (FA) Grants distribution methodology were announced last week by the NSW Local Government Grants Commission’s. The commission proposed sweeping changes to how it allocates Financial Assistance Grants to local councils, which would have reduced general-purpose funding for many councils. In the proposed model it was set to adjust grant revenue from the Australian government to NSW local councils by millions of dollars in most cases. Temora Shire Council has welcomed the deferral of the changes, following significant concerns raised during consultation. Under the proposed changes, Temora Shire Council’s indicative annual allocation would have increased from $5.41 million to $5.58 million, assuming the total funding available to NSW councils remained unchanged. However, this overall increase masked a significant shift between the two funding components. The General-Purpose component, which helps fund Council’s broader responsibilities, would have decreased from $3.60 million to $3.05 million, while the Local Roads component would have increased from $1.81 million to $2.53 million. According to the council there was concerned that this shift could have unintended consequences under the Commonwealth’s Roads to Recovery program, which requires councils to maintain a specified level of their own spending on roads. Depending on how the funding rules were applied, the increased Local Roads allocation could mean council needs to increase its overall road expenditure to continue meeting these requirements, potentially reducing some of the practical benefit of the additional Local Roads funding. Temora Shire Council mayor Rick Firman said the decision to defer the proposed changes provided an opportunity to further examine the methodology and address concerns raised by councils before a new approach was introduced. “Financial Assistance Grants are an important source of funding for councils, particularly in rural and regional areas where they help support the services and infrastructure our communities rely on,” Cr Firman said. “I’d like to acknowledge the advocacy of the Country Mayors Association of NSW, Local Government NSW and the Riverina Eastern Regional Organisation of Councils in raising concerns about the proposed changes.” “Collaboration between councils and local government organisations helps ensure the different circumstances of rural and regional communities are heard and considered when decisions are made about funding.” It was reported that the Commission consulted with the local government sector but did not explain how it had determined each council’s new funding amount, leaving councils unable to properly assess the impacts. In a letter to councils, the Commission said it received 102 submissions, 54 raising significant concerns or proposing modifications, and 38 opposing the changes. Member for Cootamundra Steph Cooke has also welcomed the announcement that it will not proceed with the changes a week after calling for transparency over its proposed council funding overhaul. Ms Cooke said that she welcomed the commission’s decision, which appears largely driven by stakeholder feedback. “It is really positive to see the Commission make a decision that reflects the concerns raised by our councils and demonstrates that stakeholder feedback has genuinely been heard,” Ms Cooke said. “Had this methodology been implemented, some councils in the Cootamundra electorate could have faced significant funding reductions, forcing difficult decisions about rate increases or service cuts.” Ms Cooke said the outcome highlighted the importance of meaningful consultation and transparency when considering decisions that affect regional communities. “I was very concerned about the lack of information available to councils in order for them to properly evaluate the implications of these proposed changes before the consultation closed,” Ms Cooke said. “When councils are being asked to comment on reforms that could have significant financial consequences, they need access to all the relevant information to make informed decisions.” “While I welcome this outcome, it must also serve as a reminder that regional, rural and remote councils cannot continue to shoulder more uncertainty at a time when they are already facing increasing cost pressures and growing demands on local services.” In his capacity as chairman of the Country Mayors Association of NSW (CMA) Cr Firman said he praised Minister Hoenig and Grant Commissioners for listening directly to the anxieties of country councils. “I commend our councils for speaking up and making their concerns known, and I am pleased that these changes will not proceed in their current form,” he said. "Financial sustainability is the number one issue facing our members, and the Financial Assistance Grants are the largest contributor to council finances after rates. This postponement shows they have genuinely heard our concerns about how these massive funding shifts would impact vulnerable rural, remote and regional communities." The Commission has deferred implementation of the proposed methodology until after the next NSW local government elections in 2028, allowing more time to investigate the concerns raised and consider the approach further.
