Local, Independant and Effective

Adj debate - 'Unfreezing' indexation on Financial Assistance Grants the right thing to do

Posted March 19, 2015


CATHY McGOWAN (Indi) (11:13): I would like to second the comments of the member for Wright. It is just fantastic to see the passionate interest he has in education and to see him acknowledging all those wonderful people who do the work that they do, and I would like to be associated with his comments.

Today I would particularly like to talk about Financial Assistance Grants to local government. I have previously addressed this House regarding these grants and regarding the decision to freeze their indexation as part of the government's budget cuts. I wish to talk about the impacts of this indexation freeze on my electorate of Indi, and to highlight the unintended consequences of this policy for the small rural and regional councils that I represent. Firstly, Madam Deputy Speaker, let me make it clear that the impact of this policy on local government budgets is hitting small rural and regional councils far more heavily than their metropolitan counterparts, as you would know. Small rural and regional councils, including those in Indi, rely on this funding to support operational activities. The impact of the freeze becomes clear, Madam Deputy Speaker, when you understand how this money contributes to councils' overall income—

An honourable member interjecting—

Ms McGOWAN: Absolutely. In Towong Shire, the financial assistance grant of $3.6 million makes up 22 per cent of the council's annual income, and in Mansfield and Indigo grants of $2.6 million and $4.2 million respectively provide 19 per cent and 18 per cent of the councils' annual budgets. In contrast, the City of Geelong receives $19 million annually, and this comes in at just seven per cent of their total revenue. For the cities of Wyndham, Casey, Whittlesea, Greater Dandenong, Brimbank and Hume, who all receive over $10 million annually through the Financial Assistance Grants program, this funding contributes only three to eight per cent of their total income.

Freezing indexation, for large metropolitan councils like these where the grant makes up such a small percentage of their income, may have negligible effects. However, in my electorate of Indi this grant makes up a significant proportion of the councils' budgets, and these cuts are having a really big impact on the communities that I represent. Over the three financial years from 2014-15 to 2016-17, the approximate losses are: in the Alpine Shire, $600,000; in the rural city of Benalla, $630,000; in Indigo Shire, $750,000; in Mansfield Shire, $470,000; in Murrindindi, $740,000; in Towong Shire, $658,000; and for Wangaratta City Council, $1,100,000, and Wodonga City, $780,000. That is a total of nearly $5.7 million that is being taken out of Indi and way, way beyond what we deserve.

The losses in Indi cannot be recouped, and in fact councils are facing an additional financial burden due to the Victorian state government's decision to cap rate rises. In addition to this, the Victorian government has just announced that the Country Roads and Bridges program will not be renewed, putting additional pressure on local councils' budgets.

One council has described the freezing of indexation as 'the straw that is breaking the camel's back'. This is really serious stuff that I am talking about today, and what it actually means on the ground is that community swimming pools, skate parks, recreation reserves and parks and gardens will receive less maintenance. It will mean reductions in other council services like maternal and child health, immunisation programs and libraries. It means that the local transfer station will go from maybe being open three days a week to one day a week. These are impacts that will be felt by communities and visitors right across Indi.

An honourable member:  Blame the Labor Party!

Ms McGOWAN: The member opposite has suggested I blame the Labor Party. Since when would we be attributing blame for the decisions made in last year's budget to some historical feat? So my call today is to ask members opposite who represent rural communities to get in there and battle for us so that this indexation will finish and funding will be reinstated in the next budget.

Sadly, the problems caused by this freeze are not limited to just this three-year period. The impact will go on and on.

So, to the four or five members of the government who are here today—and Madam Deputy Speaker Henderson, you are also a member of the government—what I would really be grateful for is this. We can stop this. We can reintroduce indexation. And that would make a huge difference to communities like mine, in the future that we need to face—hopefully, with particular emphasis on the importance of rural and regional communities and how they need more attention from government, not less.

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