Updated 15 May 2024
Treasurer Hon Jim Chalmers has handed down the 2024-25 Federal Budget.
Against a backdrop of global economic uncertainty and high levels of inflation, the Budget was focussed on providing cost of living relief and investing in new industry development.
Importantly for Local Governments, the Budget retained its commitment to a number of key funding programs for the sector. However it missed the opportunity to invest in key priorities identified in WALGA’s Federal Budget Submission.
WALGA strongly encourages all Local Governments to make a submission to the Federal Government Inquiry into Local Government sustainability by the 31st May 2024.
Read WALGA’s full analysis and commentary below.
WALGA's analysis and commentary
Overview
Treasurer Chalmers announced a $9.3 billion surplus for the 2023-24 financial year, marking the first consecutive surpluses since 2007-08. This surplus was bolstered by higher-than-expected tax revenues, driven by a robust labour market, elevated commodity prices, and increased company taxes.
However, the Budget is not expected to stay in the black for long, with deficits projected across the forward estimates and beyond with no surplus forecast in the next decade. The deficits are driven by a rapid increase in spending, up 11% over the next two years compared to revenue growth of 4% over the same period.
Debt is also expected to rise above $1 trillion by 2026, which will bring with it challenges for the Federal Government in managing ballooning interest payments going forward.
A key challenge for the Government is to spend on priority programs and initiatives without further stoking inflation. The Treasurer claims that the budget is not inflationary, with Treasury's estimates showing that price pressures will come under control sooner than expected. Inflation is tipped to return to the target band by the end of 2024, and average 2.75% during 2024-25.
The focus of the Budget is on tackling the high cost of living. While the changes to stage three tax cuts announced earlier in the year are at the centre of the Government's cost of living package, a range of other measures were also announced included $3.5 billion over three years to provide a $300 energy bill rebate to all Australian households; $1.9 billion to increase Commonwealth Rent Assistance by a further 10%; and cheaper medicines as part of a $3 billion agreement with community pharmacies.
The other major focus of the Budget was the Government's ‘Future Made in Australia’ policy, which provides incentives for clean energy and advanced manufacturing. $22.7 billion is provided over the next decade to support this policy to ensure Australia remains competitive in the global economy.
The Budget also contained significant funding to address other challenges facing Australians, including an additional $6.2 billion investment in housing; $2.8 billion to strengthen Medicare and boost the health system; and other significant investments in mental health, aged care, and disability support.
Local Government Priorities
Financial Assistance Grants
It is disappointing that the Federal Government has once again failed to deliver on its commitment to a fair and reasonable increase in Financial Assistance Grants for Local Governments.
In 2024-25, $3.27 billion has been provided for Financial Assistance Grants funding, with WA to receive $399.3 million. Financial Assistance Grants as a proportion of total Federal Tax revenue has increased only slightly to 0.51% in 2024-25, up from 0.49%. The Federal Government will continue to work with states in relation to the financial support of the Local Government sector, including advancing funding earlier than would usually occur.
The Budget retained its commitment to a number of important funding programs.
Roads to Recovery Program
As indicated by the Government following the conclusion of the 90-Day Infrastructure Review, Roads to Recovery funding will double by 2027-28. WA Local Governments are allocated 14.6% of the national total funding. The five-year program concluding in June 2024 delivered an average of $73.1 million per year in WA. The new program is forecast to provide $497.1 million over the next four years, representing a 70% increase.
WA's allocation of the Roads to Recovery program is as follows.
2024-25 $95.0 million
2025-26 $117.0 million
2026-27 $138.9 million
2027-28 $146.2 million
The program remains an allocation over a five-year period, allowing Local Governments some flexibility to move funding between years within the program.
Black Spot Program
Nationally, funding for the Black Spot Program, which funds safety improvement works in places where there have been serious crashes or where serious crashes are likely to occur, has been increased modestly to $131.6 million in 2024-25 and is forecast to increase to $140 million in 2025-26 and $150 million in 2027-28.
The indicative allocation for WA increases from $14.6 million in 2024-25 to $18.4 million in 2027-28.
Safer Roads and Infrastructure Program
The Federal Government has combined the former Bridges Renewal Program and Heavy Vehicle Safety and Productivity Program into a broad-based program targeting improvements to the safety and productivity of the local road network. The allocation to WA is $24.8 million (12.4%) of the $200 million per year national program. This is a small increase on the funding typically attracted by WA projects under the previous programs.
Local Roads and Community Infrastructure Program
As anticipated, the very popular Local Roads and Community Infrastructure program is continuing to be wound down. Final budget allocations to WA Local Governments are forecast to be $41.5 million in 2024-25 and $37.1 million in 2025-26, down from $106.2 million in the year ending June 2024.
Active Transport Fund
The Budget establishes a new Active Transport Fund, with $100 million provided over four years from 2025-26 to support construction and upgrade of bicycle and walking infrastructure. No allocations are provided at State or Territory level. This is a very modest investment relative to the total transport infrastructure program investment and does not come into effect this financial year. Given that four major capital cities, including Perth have active transport projects included on the Infrastructure Australia Priority Projects list, this is an area that needs further consideration.
Regional Telecommunications
A Regional Roads Australia Mobile Program has been established and provided with $50 million over two years to improve mobile telecommunications on major roads. This may be of significant benefit given the poor levels of coverage on key arterial roads in WA including the Eyre Highway, Great Northern Highway and North West Coastal Highway.
Other announcements
Other announcements of interest to Local Governments include:
- Project funding in 2024-25 for WA projects including:
- Perth Aboriginal Cultural Heritage Centre $50 million
- Busselton Jetty $7.4 million
- Perth City Deal $82.2 million
- A further $40.9 million over two years from 2024–25 to continue implementing the Nature Positive Plan.
- $116.2 million over five years from 2023–24 to strengthen and support the health workforce. This includes $17.4 million in 2024–25 to extend the General Practice Incentive Fund until 30 June 2025 to improve access to primary care in areas where there is inadequate service availability.
- $138.7 million over four years from 2024–25 (and $18.9 million per year ongoing) to improve Australia’s preparedness to respond to all-hazard disasters and resilience to natural hazards.
- $12.6 million over four years from 2024–25 to support the delivery of the Government’s Urban Agenda, supporting a national approach to sustainable urban development, oversight of urban renewal projects and the continued delivery of city and regional deal projects.
- $151.4 million over four years from 2024–25 (including $3 million in capital funding in 2024–25) to accelerate progress under the National Agreement on Closing the Gap and delivering better outcomes for First Nations peoples.
To read more about what the Federal Budget means for Local Governments visit the Australian Local Government Association website.
WALGA will work through the detail of the Budget in coming weeks and keep the sector informed on any key issues affecting Local Government.
