Financial Assistance Grants

Financial Assistance Grants are provided by the Commonwealth Government to local government.  The grant comprises of general purpose grants and local roads funding.  A small portion for natural disasters is taken from the general purpose component.

2023-24  Financial Assistance Grants consists of:

• $ 747.377 m   -  Total Financial Assistance Grants
• $ 550.164 m   -  General Purpose Grants *
• $ 197.213 m   -  Local Roads Grants

* General Purpose Grants includes $0.368m for natural disaster.

2023-24  Financial Assistance Grants PDF, 44.07 KB detailed grants to each council in Victoria

Additional information on the calculation of general purpose grant and local roads grants is available in the Victorian Local Government Grants Commission's annual report.

2023-24  General Purpose  =  $550.164m  
(including $0.368m for natural disaster)

The Local Government (Financial Assistance) Act 1995 states that general purpose grants are untied. Therefore, councils can use the grants as required by local needs..

General purpose grants are recommended between Australian states and territories on a population basis.

The Commission's methodology for recommending general purpose grants takes into account each council's assessed relative expenditure needs and relative capacity to raise revenue.

For each council, a raw grant is obtained, calculated by subtracting the council's standardised revenue from its standardised expenditure.

The available general purpose grants pool is then recommended in proportion to each council's raw grant, taking into account the requirement in the Commonwealth legislation and associated national distribution principles to provide a minimum grant to each council.

Under the Commission's general purpose grants methodology, standardised expenditure is calculated for each council on the basis of nine expenditure functions. Between them, these expenditure functions include virtually all council recurrent expenditure.

Nine expenditure functions are:

• Governance
• Family & Community Services
• Aged & Disabled Services
• Recreation & Culture
• Waste Management
• Traffic & Street Management
• Environmental Protection Services
• Business & Economic Services
• Local Roads

A key element of the general purpose grants methodology is a set of cost adjustors which are used in various combinations against each funding.  These allow the Commission to take account of the particular characteristics of individual councils which impact on the cost of service provision on a comparable basis.

The 12 Cost Adjustors  PDF, 857.06 KB are :

• Aged Pensioners
• Economies of Scale
• Environmental Risk (Fire & Flood)
• Indigenous Population
• Language
• Population Dispersion
• Population Growth
• Population Under 6 Years
• Regional Significance
• Remoteness
• Socio-Economic
• Tourism
• Matrix

The standardised rate revenue is calculated for each council by multiplying its valuation base by the average rate across all Victorian councils over three years. Revenue raising capacity is calculated separately for each of the three major property classes (residential, commercial/industrial/other and farm) using a three year average of valuation data. Revenue in lieu of rates received by some councils, is added to this calculation.

The relative capacity to raise revenue from user fees and charges, or standardised fees and charges revenue, also forms part of the calculation of standardised revenue.

A set of revenue adjustors is used in the formula and are designed to reflect differences between councils and take account of factors that impact on a council's relative capacity to raise revenue from user fees and charges.

The 5 Revenue Adjustors PDF, 367 KB are:

• Household Income
• Socio-Economic
• Tourism
• Value of Developments
• Valuations (Commercial)

2023-24  Local Roads =  $197.213m

The local roads grants is designed to reflect the relative needs of Victorian councils in relation to local roads funding in accordance with the national principle relating to the recommendations of the local roads grant.

The local roads grant includes the calculation of a 'network cost' which draws on each council's road length and traffic volumes.

Average annual preservation costs for each traffic volume range are used in the model to reflect the cost of local road maintenance and renewal.

The methodology also includes a series of cost modifiers for freight loading, climate, sub-grade conditions, materials and strategic routes and takes account of the deck area of bridges on local roads.

Five cost modifiers – freight loading, climate, materials, sub-grades and strategic routes – are used in the local roads model to take account of local conditions. The current information sheets for each of the cost modifiers, as well as a Local Roads Grants Model are available below.

The 5 Cost Modifiers PDF, 274.32 KB are:

• Freight Loading
• Climate
• Sub-Grade
• Materials
• Strategic Routes