Federal grants cuts ‘a massive blow’

GIPPSLAND councils will receive $37.4 million in Financial Assistance Grants from the federal government this financial year.

However, the federal government’s freeze on indexation of the grants means Victorian councils will miss out on $139 million during the next three years.

Gippsland MHR Darren Chester said the grants would allow Latrobe, Wellington and East Gippsland councils to fund infrastructure, health, recreation, environment, employment and roads projects.

Mr Chester said indexation of the grants would be temporarily paused from this year, as part of the government’s plan to repay debt inherited from the previous Labor government.

“It’s important that the federal government supports councils across Gippsland as they continue to deliver a diverse range of services and new facilities with a limited rate base,” Mr Chester said.

“In a perfect world, we would be able to increase that funding every year, but the former Labor government left the nation’s budget in such a mess that we’ve had to make some tough decisions.

“No funding has been cut from local councils, but the anticipated CPI increase has been paused.

“It’s pleasing that Gippsland councils will still receive more than $10 million each from the Commonwealth this financial year through the Financial Assistance Grants.

“In addition, they will receive funding from the Roads to Recovery, Black Spot and Bridges Renewal programs.”

The total breakdown of Financial Assistance Grants allocated to Gippsland councils includes $13.8 million to East Gippsland Shire Council, $11.4 million to Latrobe City and $12.2 million to Wellington Shire.

The first quarterly payments for 2014-15 have been made.

According to the Municipal Association of Victoria, the state’s peak body for local government, a total of $5.65 million will be missing in the first quarterly payments to Victorian councils.

MAV president Bill McArthur said the freeze on indexation would force councils to reassess their budget options, such as increasing rates or cutting back services.

“We have known since May that these cuts were coming, and some councils have had to take extreme measures, like scaling back road maintenance and other council services, to make up for the shortfall,” he said.

“In rural areas the grants provide up to 31 per cent of total funding, so rural communities will suffer a massive blow.”