The House of Representatives Standing Committee on Regional Development, Infrastructure and Transport has today announced a new inquiry into the funding and financial sustainability of local governments in Australia.
In a statement, Committee chair, Fiona Phillips, said “the Committee wants to gain a deeper understanding of the financial relationship between local government and other levels of government in Australia, with a particular emphasis on funding mechanisms and fiscal sustainability.”
The inquiry will aim to identify how funding arrangements affect local government’s ability to deliver services and invest in local infrastructure by identifying all sources of government funding received by local governments.
The Committee will also be exploring how to overcome barriers to infrastructure service delivery. It will consider trends in attracting and retaining a skilled workforce, impediments to security for local government workers and the impacts of labour hire practices.
The Committee will be considering whether existing funding mechanisms are addressing the evolving responsibilities of local governments.
News of the reinstatement of the national inquiry has been welcomed by the Australian Local Government Association (ALGA).
ALGA President and Gladstone Mayor, Matt Burnett said the inquiry’s interim report, published in February this year, highlighted how councils across urban, regional, rural, and remote areas, are all facing increased costs from changing population trends, ageing infrastructure and increased service delivery obligations.
“We want the Government’s response to the inquiry to include a significant increase in untied funding for all councils, including through federal Financial Assistance Grants,” said President Burnett.
“The percentage of national taxation collected by councils has also dropped to a 15-year low and we continue to shoulder more responsibilities without corresponding financial support.
“We need an extra $3.5 billion in federal funding that will bring us back to one per cent of national taxation revenue.”
“We stand ready to deliver for our nation but need more foundation funding.
“It’s time for the Government to recognise that national challenges need local solutions – and that means empowering councils with funding to take on these challenges to benefit communities.”
Local Government Association of Queensland (LGAQ) Chief Executive Officer, Alison Smith said it was imperative the new Inquiry had a firm reporting date of June 2026 to ensure it could deliver its recommendations and make appropriate budgetary provisions before the next Federal Election.
Ms Smith said Councils were operating in an environment of growing expectations, rising costs and Federal funding that has “flatlined”.
“Councils were promised fairer funding by the Federal Government in 2022, yet the percentage of taxation revenue, supplied to councils as untied funding, has continued to go backwards,” Ms Smith said.
“At the same time, cost-shifting from other levels of government has ballooned to more than $360 million annually in Queensland alone. This is unsustainable.”
The LGAQ said it will also urge the committee overseeing the Inquiry to recommend restoring at least 1% of Commonwealth taxation revenue back to local governments through Financial Assistance Grants, indexed annually to provide certainty and sustainability.
The Committee is welcoming submissions from interested organisations and individuals by 3 February 2026.
Further information on the inquiry, including the terms of reference and how to contribute, is available on the Committee’s website.
