Flinders Shire calls for urgent reform to Financial Assistance Grants: “Productivity? Support the people who support the nation”

Flinders Shire Mayor Kate Peddle has called on the Federal Government to urgently overhaul the Financial Assistance Grants (FAGs) system, warning that regional councils like Flinders Shire are being pushed to the brink while continuing to deliver essential services under impossible conditions.

“For more than 30 years, these grants have slipped in value – to just half a per cent today,” said Mayor Peddle. “That’s not just a statistic – it’s a direct hit to our ability to serve our communities.”

“The Treasurer is spending a lot of time this week talking about productivity. Our rural communities do the heavy lifting – we feed the nation, we power the state through our minerals, and yet in some cases we’re expected to live with third world conditions. We need to reverse the priorities – support the people who support the nation.”

The Australian Local Government Association (ALGA) has long campaigned for the restoration of FAGs to one per cent of Commonwealth tax revenue.

While Flinders Shire supports this goal, Mayor Peddle said that for rural and regional councils, it’s not just about restoration – it’s about reform.

“We support restoring Financial Assistance Grants to one per cent across the board, but it’s not enough,” she said.

“The current formula does not serve regional councils. We need targeted support. Our costs are high, our populations are small, and our rate base simply cannot sustain the essential infrastructure and services our residents deserve.”

Mayor Peddle explained the stark reality facing Flinders Shire.

“To fully recover the annual cost of delivering water, we’d need to increase rates by 25 per cent,” she said. “That’s not sustainable, especially with the pressures already on our ageing infrastructure and cost of living.

“Our sewerage and water treatment plants need $35 million in upgrades – but our total annual budget is only $50 million. How is that achievable?”

While the Australian Government recently announced the bring-forward of $1.726 billion in 2025–26 Financial Assistance Grants entitlements, Mayor Peddle said it doesn’t go far enough for communities in the bush.

To put this in context, in 2021–22 total government spending on welfare services and payments was $212.4 billion, of which $186.2 billion (88 per cent) came from the Federal Government. In contrast, Financial Assistance Grants to local governments total less than $3 billion nationally — around 1.3 per cent of what is spent on welfare.

“There’s a big difference between welfare expenditure and investment in local government. Welfare supports individuals, but funding local government benefits entire communities — directly, immediately, and equitably,” said Mayor Peddle.

Mayor Peddle also highlighted that if the one per cent FAGs target was restored, Flinders Shire alone would hypothetically receive an additional $10 million annually.

“This is not new money – it’s a fair share of taxpayer revenue. It’s money from the Australian people, for the Australian people – and yet it’s been allowed to diminish over time,” she said.

Mayor Peddle pointed to the increased strain on councils as a result of cost shifting from other levels of government.

“There is no longer annual state funding for wastewater or sewerage. If a major metropolitan council had E. coli in their water supply, like we did last December, they’d have the resources to fix it immediately. We don’t. That’s the level of inequality we’re dealing with,” she said.

Mayor Peddle also welcomed the appointment of former Flinders Mayor Jane McNamara to the Queensland Local Government Grants Commission this year.

“Jane understands the reality of life in regional councils. I am hopeful her advocacy at the Grants Commission will ensure regional voices are heard, and that the funding formula reflects the true cost of service delivery in rural Australia,” she said.

Looking ahead, Mayor Peddle urged State and Federal leaders to stand behind the communities who stood behind them.

“The Crisafulli Government won the election on the back of regional support. With a Cabinet that understands local government and regional realities, we are well placed for Queensland to make a case to Canberra. It’s time for the Federal Government to step up,” she said.