Federal Budget

The 2013 Federal Budget delivered by Treasurer Wayne Swan tonight confirms key ongoing funding for communities via Councils and provides for the proposed referendum to underpin the direct funding program such as Roads to Recovery.

The Federal Budget has been affected by continual revenue write-downs due largely to the increase in the value of the Australian Dollar and overall lingering effects of the Global Financial Crisis. These factors have impacted the Budget bottom-line to the effect of $170 billion since 2008.

The Budget shows 2013-14 will be in deficit ($18billion cash) with a $10.9 billion deficit in 2014-15, but will return to a modest surplus ($6.6 billion) in 2016-17. Despite a surplus not being achieved for another four years, this will be delivered well ahead of any of the major advanced economies.

The Australian economy will grow at a lower than anticipated rate of 2.75 per cent in 2013-14, returning to trend at 3 per cent in 2014-15. Unemployment projections are relatively stable at 5.75 per cent.

The Budget 2013-14 reflects the Australian Government's commitment to cap real spending growth at lower than 2 per cent a year and fully offset new spending with savings.

In spite of the difficult financial situation, the Australian economy is forecast to return to deficit and retire public debt faster than any economy in the developed world.

Key Budget overview highlights can be found the in the ALGA's Factsheet: ALGA key points from 2013 Federal Budget (26 kb)

The ALGA's media release can be found here: http://alga.asn.au/?ID=9262

Key funding to SA Councils is set out in this table:

The LGA's Media Release can be found here: LGA Media Release

Further ALGA analysis can be found here: ALGA analysis

Federal Treasurer Wayne Swan tonight delivered the 2012 budget predicting a return to a small surplus ($1.5 billion) in 2012-13 ahead of any of the major advanced economies. The current year's deficit will be higher than forecast in last year's budget and future surpluses lower than previously predicted.

Based on the Budget papers, the Australian economy is set recover to a stronger growth pattern, after a lower than anticipated growth rate of 3 per cent in 2011-12, to 3.25 per cent in 2012-13, with unemployment expected to be relatively stable with a small increase to 5.5 per cent before returning to 5 per cent in the forward estimates. Net debt will peak at 9.6 per cent in 2011-12, almost 2 per cent higher than anticipated. This is expected to drop below 7.5 per cent by 2014-15.

The Budget 2012-13 reflects the Australian Government's continued commitment to cap real spending growth at lower than 2 per cent a year and fully offset new spending with savings.

In spite of the difficult financial situation, the Australian economy is rebounding quickly, and is both returning to surplus and retiring public debt faster than any economy in the developed world. However, despite the very conservative estimates of economic growth and unemployment movements in the forward estimates, this surplus is a very small one and certainly vulnerable to ongoing global stability.

Key Budget overview highlights can be found in the ALGA's: Key Points Fact Sheet. Federal Budget papers can be accessed using the link above right.

Highlights for SA Councils:

The budget presents no particular surprises for SA Councils other than the early payment of two quarters of Financial Assistance Grants payments from 2012/13 in the current financial year (ie by 30 June).

• The Roads to Recovery program is to be extended to 2019 at the current $350m a year nationally - likely to deliver about $31m a year to SA Councils between 2014 and 2019;
• Two quarters of 2012/13 Financial Assistance Grants will be paid this financial year raising payments nationally this year to $2.7 billion and reducing payments in 2012/13 to $1.1 billion;
• Supplementary Road Funding to SA Councils of $16.9m is continued in 2012/13;
• Funding under the Road Safety Blackspots program is extended to 2019, and seven years of funding announced for a heavy vehicle road safety program;
• Funding for RDA committees, funding under the Regional Development Assistance Fund (RDAF) and under the Regional Infrastructure Fund (RIF) are maintained; and,
• Funding is announced for some major projects including upgrades to the rail freight route through Adelaide at Goodwood and Torrens Junctions.

The LGA's initial media response can be found here: Media Release 

Further ALGA information can be accessed here: ALGA Budget Analysis

Federal Treasurer Wayne Swan delivered the 2011 Federal Budget tonight predicting growth of 4p.c. for 2011-12 and stable unemployment below 5% for several years and with net debt peaking at 7.2p.c. in 2011-12 before declining.

The Budget shows an economy recovering strong growth after lingering effects of the Global Financial Crisis, the increase in the value of the Australian Dollar and the impact of natural disasters at home and abroad.

The Budget projects deficits for 2010/11 and 2011/12 ($49.4 & 22.6 billion cash respectively) but a return to a moderate surplus ($3.5 billion) in 2012-13 and ahead of any of the major advanced economies.  Deficits will be higher and surpluses lower than forecast at the time of the 2010-11 Budget.

Highlights for SA Councils

The budget holds no financial surprises for Local Government in SA but Councils will welcome the continuation of the Supplementary Local Road Funding for a further three years. Key issues are:

• Financial Assistance Grants maintained with growth as per existing legislation - as in recent years the first payment for 2011-12 will be made late in 2010-2011. Total estimated payment to SA Councils will be $145.5 of which $36.4m will be paid this financial year.
• A review into the "equity and efficiency of the total current funding" under Financial Assistance Grants expected to report in 2012-2013.
• Supplementary Local Road Funding to SA Councils of $17m ($50.6m over three years).
• Roads to Recovery Program funding - $350m nationally.
• Further funding under the Black Spots program, Remote Aviation Infrastructure Fund, for transport regulation reform, and for the development of a "national smart managed motorways trial".
• A regional investment program of $4.3 billion nationally including additional funding for RDA Committees, regional universities and health initiatives.
• A National Urban Policy with investment of $180m.
• Significant investment in employment and workforce planning initiatives.

Link to: initial LGA media release. 

ALGA information can be sourced directly here: http://www.alga.asn.au/policy/finance/federalBudgetAnalysis2011/

Key Local Government programs supported by the Federal Government have all been maintained in a "steady as she goes" budget for Councils. This includes SA's supplementary road funding which will total nearly $15.5m in 2010/11.

The Budget announces a healthier economic outlook for Australia and speculation might suggest it leaves room for further commitments to be made in the lead up to the Federal Election expected later this year.

Some new program activity is likely to be of interest to Councils but none appear specifically targeted towards Local Government.

Financial Assistance Grants, and Roads to Recovery funds are maintained as expected (including supplementary road funding to SA).

The ALGA has highlighted the following broad issues:

• The Budget 2010-11 will be in deficit this year ($40.8 billion cash) but will return to moderate surplus ($2 billion) three years ahead of schedule (2012-13) and ahead of any of the major advanced economies. Deficits will be lower than forecast at the time of the Budget 2009-10.
• The Australian economy is set to continue its strong growth pattern, at 3.25 per cent in 2010-11 and 4 per cent in 2011-12, with unemployment expected to be relatively stable (close to 5 per cent in 2010-11 and 5 per cent in each of the next three years).
• Net debt is expected to peak lower and earlier (by two years) than forecast previously, at 6.1 per cent, in 2011-12.
• The Budget documentation says: 'Australia now has the fastest growth, lowest debt, lowest deficit and the second lowest unemployment rate when compared with the major advanced OECD economies' and that '...we are supporting the economic recovery today by building infrastructure that rural and regional Australia needs for the future' (Stronger Rural and Regional Communities).
• The Budget 2010-11 reflects the Australian Government's commitment to cap real spending growth at lower than 2 per cent a year and fully offset new spending with savings.

For local government, the most directly relevant measures include:

• Continued general purpose payments (FAGs) being:
  • The funding encompasses "record funding to assist rural and regional councils and shires to deliver their services, maintain local roads and upgrade local community facilities..." Around $1.6 billion in funding will go to rural and regional councils through FAGs and the Roads to Recovery program (R2R)" of which $1.35 billion is FAGs and $235 million is R2R;
  • The first instalment of 2010-11 payments will again be paid early ($511.6 million going to councils before the end of 2009-10) "to assist local councils with planning for the recovery and to ensure local government has maximum certainty to begin planning their 2010-11 works programs"
• Roads to Recovery funding remains to 2013-14.

There is no new funding in the Budget for the Regional and Local Community Infrastructure Program.

Other measures of interest to local government in the Budget include:

• Rail productivity improvements will see the Australian Government inject equity of $996 million in the Australian Rail Track Corporation (ARTC) for a range of upgrades to modernise and improve capacity of the interstate rail network, creating around 1,500 jobs mainly in regional Australia, reducing carbon emissions (some 280,000 tonnes over 30 years) and helping to get more trucks off regional and rural roads. Connected to this, a $71 million allocation from the NSW Nation Building money to complete detailed planning of the Moorebank Intermodal Freight Terminal Project in Sydney's south west will be committed, with the facility expected to take more than 1 million truck movements off the road;
• Money will be allocated for national transport regulation, including the heavy vehicle regulator in Queensland;
• $5.9 million will be allocated for remote aviation infrastructure in 19 Indigenous communities;
• The Minister for Population will over the next 12 months '.. consider what action is needed to accommodate Australia's long term needs...[including] how infrastructure investment can support future growth....';
• A range of rural and regional health initiatives, including training and education for doctors and nurses, and education and training incentives for nurses and personal care workers in aged care; $28.8 million over four years between 2010-11 and 2013-14 to assist around 750 locum nurses (3000 over four years) with their costs of living and further funds to establish the first ever rural locum scheme for nurses; $5.3 million over four years for a rural locum scheme for allied health professionals, as well as $417 million for better access to GPs after hours and establishing Medicare Locals across the country to identify local needs;
• Funding for RDA committees in 2010-11 will be $15 million;
• NBN funding, including $16 million to the Department of Broadband, Communications and the Digital Economy over 2 years for a national information campaign, focused on raising the public awareness of the value of superfast broadband which will be delivered to households, businesses and organisations through the rollout of the NBN ($7.6 million will be met from the existing resourcing of the Department);
• Digital tv switchover initiatives over 12 years to 2020-2021, and a satellite subsidy of $99.1 million to the end of 2013 for viewers reliant on community run self-help towers who will need access to the new satellite service when the self-help centres close;
• Remote service delivery flexible funding pool for Indigenous communities building on the Local Priorities Fund established under the Closing the Gap in the NT to address local priorities and continued Closing the Gap funding in the NT to 2012-13.

Other announcements of note

The Australian Government Budget also includes the following initiatives:

• Investment in a new Renewable Energy Future Fund ($652 million) to build further on the $5.1 billion Clean Energy Initiative;
• A 50 per cent discount on up to $1,000 of interest including interest earned on deposits, bonds, debentures and annuity products from 1 July 2011;
• Personal income tax reductions from 1 July 2010 (previously announced) but a new standard tax deduction will be available from 2012-13 ($500 for work-related expenses, doubling to $1000 in 2012-13);
• $533 million over 5 years to improve access in the community to high quality aged care;
• A 12 month trial of an improved drought support system in WA (about half of WA) at a cost of $18 million;
• A new National Plan for Environmental Information at $18 million over 4 years to co-ordinate and prioritise the way the Australian Government collects, manages and uses environmental information, comprising a Reform Program and a data Co-ordination program (Budget Paper No.2)
• $23 million over five years to implement the National Waste Policy agreed to by the Environment Protection and Heritage Council in November 2009.

ALGA's full Budget analysis is available on the ALGA website at: http://www.alga.asn.au/policy/finance/federalBudgetAnalysis2010/

SA's Local Government Association has welcomed the ongoing commitment of the Australian Government to local infrastructure in its 2009-10 Budget.

The Budget maintains the Government's commitments to untied funding for Councils, local road funding including the Roads to Recovery Program and Supplementary funding to SA Councils, and its new Community Infrastructure Program.

Councils will also benefit from the early payment of one quarter of untied funding for Councils for 2009/10. Payment of the first installment of $479.7 million of $1.9 billion in Financial Assistance Grants to local government nationally is to be made before 30 June.

The LGA noted good news in the renewal of disaster mitigation funding through the new Disaster Resilience Australia Package of $79.3 million nationally over 4 years; $72m for the Health Communities program; $3m for remote airstrips; broadband funding; and other more specific initiatives.

Highlights of the Budget for Local Government identified by the Australian Local Government Association (ALGA) include:

• $1.9 billion for Financial Assistance Grants to local government nationally;
• $58.2 million over 4 years as supplementary local road funding to address the relative disadvantage of South Australia in the local roads component of the Financial Assistance Grants;
• Confirmation of $550 million nationally over 2 years for the Community Infrastructure Program - Strategic Projects;
• Roads to Recovery at $350 million per year for the next 5 years nationally;
• $79.3 million in the next 4 year for a Disaster Resilience Australia Package to strengthen efforts to combat man-made and natural threats and disasters across Australia;
• $72 million for Healthy Communities nationally to fund the rollout of lifestyle modification programs focusing on poor nutrition, physical inactivity, smoking and excessive alcohol consumption;
• $715.3 million to continue to support drought affected farmers, farm families, small business and rural communities nationally;
• $8.5 billion for nationally significant transport infrastructure projects across Australia;
• $3 million nationally for 2009 - 10 to up-grade remote area airstrips identified under the Remote Air Service Subsidy Scheme requiring priority work;
• $5 million over 4 years for Rural National Broadband Network Coordinators to encourage local government, community and business usage of broadband opportunities;
• $15 million for the ABC to encourage the development of user generated content and to establish websites creating 'visual town squares' for communities to share experiences;
• $10 million over 4 years to support the expansion of the Sporting Chance Program to improve education, life skills and employment prospects for Indigenous students

ALGA's full Budget analysis will be available on the ALGA website at: http://www.alga.asn.au/policy/finance/federalBudgetAnalysis2009/

The LGA has welcomed the Federal Budget on behalf of Councils. Click here to view the LGA's initial media release.

The budget confirms untied Financial Assistance Grants of $96.9 million, Identified Local Road Grants of $31.4 million - plus $14.2 million in supplementary funding for SA, and $30.3 million under the Roads to Recovery Program.

New program funding in relation to climate change, housing affordability, urban and stormwater recycling and electronic development assessment had been expected but a 12 month extension to the Natural Disaster Mitigation Program was not.

In addition we have welcomed the foreshadowing of a "Regional and Local Community Infrastructure Program" for 2009/2010.

Highlights (from ALGA):

The Budget will deliver a surplus of $21.7 billion in 2008-09, which is 1.8 per cent of GDP, the highest surplus in terms of GDP for over a decade.

Financial Assistance Grants (FAGs) to local government will increase in 2008-09 to $1,860 million (consisting of $1288 million General Purpose Grants and $571.5 million in untied local roads grants). This is estimated to be $81.7 million above the current financial year, and a nominal increase of 4.59 per cent. Supplementary funding to South Australia (SA) Councils for local roads will be $14.2 million in 2008-09.

The FAGs funding excluding SA roads it is 0.62 per cent of total Commonwealth taxation revenue. Total direct funding for local government in 2008-09 will be $2,547.8 million. This includes FAGs, Roads to Recovery and other Specific Purpose Payments (SPPs).

There will be a new Regional and Local Community Infrastructure Program from 2009-10 to invest in the future of our regional communities but details will be provided next year. This will be in addition to $176 million over 4 years for Better Regions.

There is a commitment to Nation-Building Infrastructure of $3.2 billion in 2008-09 for a range of nation-building road and rail initiatives which will include connecting freight corridors in regional areas to local roads.

There will be three new infrastructure funds that provide around $40 billion for capital investment in infrastructure, education and health:

• $20 billion in a new Building Australia Fund (BAF) to finance roads, ports, rail and broadband, funding from 2007-08 and 2008-09 surpluses, once realised. An allocation of $75 million will be made before 30 June 2008 for immediate feasibility studies on high-priority transport projects across Australia.
• $11 billion in a new Education Fund to finance skills, TAFE colleges and universities.
• $10 billion in a new Health and Hospitals Fund to finance improvements in the health and hospital system.

In addition to BAF the Government will invest $22.3 billion in land transport infrastructure from 2009 - 10 to 2013 - 14 under Auslink2.

A new Council of Local Australian Governments will be established to provide a direct link between the Australian Government and local councils and their communities on issues of national significance including constitutional recognition.

A COAG Reform Fund will be established through which funding from the above three infrastructure funds will be distributed to the States to be used to finance capital projects with the States. The States will receive $78.6 billion in 2008-09 in total, and new National Partnership payments will in future budgets allow distribution of funding for recurrent expenditure in areas of COAG Reform.

The 'Australia's Future Tax System' review, will report progressively from July 2008 to the end of 2009. The Treasurer has described it as the most comprehensive review of our tax system since World War 2.

As part of the Government's climate change strategy it will provide $130 million over 4 years for the Australia's Farming Future initiative to assist the agricultural sector adapt and respond to climate change. Additional initiatives in the Budget include:

• $2.25 billion over five years for Caring for Our Country
• $12.6 million over four years from 2007-08 to assist 29 regional airports with baggage security screening (the Regional Airport Funding program will provide $29.5 million for regional airports to implement basic security measures)
• $270.7 million for the Australian Broadband Guarantee
• Transitional income support from 16 June 2008 to 30 June 2009 of $14.5 million to farm families in financial difficulty.
• Housing Affordability Fund with $30 million for Electronic Development Assessment (eDA)
• $39 million over five years to bring nurses back into the workforce.

ALGA has prepared the following short overview of the 2007 Federal Budget from a Local Government perspective. At this point we understand that the government has put in place measures which will maintain our increased level of Identified Local Road Grants (at slightly more than the $13m extra we recieved this year) in ongoing recognition of the inequity in the base arrangements but it is not fully clear whether this is a "permanent" redistribution or a time-limited special allocation for SA.

The extension of R2R until 2014 and an extension of the Auslink Strategic Regional Program to 2012 along with a once off injection of an additional $250m this financial year to the strategic regional program for project put forward but not funding in the earlier round.

There has been no commitment to the Local Community Infrastructure Renewal Program but ALGA believes this initiative will be supported during the federal election campaign.

Highlights: 

Local Government financial assistance grants (FAGs) maintained in real terms at $1211.7m.

Identified Local Roads Grants maintained in real terms at $537m, plus a supplementary payment of $13.5m to South Australia.

$22.3b AusLink over five years.  This includes: 

• Roads to Recovery will be extended to 2014 with the further allocation of $1750m from 2009 - 2014.  R2R funds will increase by 14% from $307m pa to $350m pa from 2009 - 10. 
• $250m AusLink Strategic Regional in to be paid by 30 June 2007
• A further $300m for AusLink Strategic Regional 2009 to 2012
• Black Spots Funding renewed for 6 years from 2008 to 2014.  Total funding will be $345m -  Funding will increase to $60m per year.

$22m over 4 years for regional airports.  These funds to contribute to improving the safety of 300 airstrips in remote and isolated areas.

$24m for the continuation of subsidy of enroute air traffic control charges.

$10 billion water plan for the Murray-Darling Basin.

$2b for the renewal of the Natural Heritage Trust

Increased rebate of up to $8000 for households installing solar panels.

From 1 July 2007 rates of Childcare Benefits will increase by 10% on top of indexation.

$1.6 billion for aged care sector initiatives.

Extended drought funding.

Tax cuts.

Budget surplus of $10.6 billion.

Further analysis will be undertaken and provided in coming days on the ALGA website linked above right.