LOCAL councils across the region will be forced to reassess their adopted 2012-13 budgets after the federal government substantially overestimated the amount of funds councils would receive in financial assistance grants for 2011-12.
Shires Association of NSW president Cr Ray Donald said councils throughout NSW planned their budgets incorporating projections for financial assistance grants (FAGs) provided by the federal government.
“It’s a disgrace the federal government’s FAG estimates for 2011-12 were so over-inflated that many councils will be short the funds needed to carry out many of the critical local services and vital capital works projects planned for in their budgets,” Cr Donald said.
“It’s very disappointing that I’ve already heard from several NSW councils they are considering postponing or cancelling projects which were to be funded from FAGs.”
Cr Donald said due to the federal government’s gross miscalculation, many NSW councils no longer had the necessary funds to see their 2012-13 projects through.
“This will be disastrous for those communities impacted,” Cr Donald said.
“I call on the Australian government to honour the full estimated amount of FAGs for 2011-12 to ensure councils can fulfil their commitments and planned activities as adopted in their current budgets.”
Local Government Association of NSW vice-president Cr Allan Smith said many councils relied on the general revenue grants and the estimate they were given by the federal government.
“Thanks to this government’s over-zealous projection of the 2011-12 FAGs, councils will need to re-evaluate whether they can deliver promised services and infrastructure, as detailed to communities in their budgets and operational plans,” Cr Smith said.
“While it’s normal for grant adjustments to be made, the 2012-13 ‘negative’ adjustment is abnormally larger than previous years and will have a detrimental effect now and in the future on councils and their communities.”
Cr Smith said the LGSA struggled to understand how the government managed to get their estimates so wrong and hoped the FAG system was improved in the future.
He said the NSW local government values the support it receives from the federal government and intends to continue the good working relationship it has established with the Department of Regional Australia, Local Government, Arts and Sport.
NSW councils were recently advised of adjustments to the FAGs by the NSW Grants Commission.