AUSTRALIAN Local Government Minister Simon Crean has announced a review into the Local Government Financial Assistance Grants program to be conducted by the Commonwealth Grants Commission.
The grants, which are currently provided by the Australian Government under the Local Government (Financial Assistance) Act 1995, have totalled more than $37 billion since 1974.
Mr Crean said the $2.1 billion allocated to the program this financial year is made up of a general purpose grant and local roads grant that are paid through the states and territories to local government and used by councils according to local priorities.
Both components of the grants are untied in the hands of local government, allowing councils to spend the grants according to local priorities.
"Whilst the program has been a successful one and allowed local governments to invest in key local priorities, a comprehensive review of the Local Government Financial Assistance Grants program has not occurred for many years—a lot has changed since then," Mr Crean said.
Mr Crean said the review will identify tangible measures for improving the impact of Financial Assistance Grants on the effectiveness of local governments and their ability to provide an equitable level of service to their residents.
"The review will be conducted in two stages to allow time to take into account the Commissions other key activities," he said.
The Minister said the initial stage will examine the policy and administration of the Financial Assistance Grants program to make the most of existing funding, including making sure the National Principles that guide the distribution of Financial Assistance Grants to local governments are still valid.
The Australian Local Government Association (ALGA) welcomed the announcement, adding that it had long called for a review of the grants.
However, the Association has argued that the amount of funding provided by the Federal Government to councils is not adequate and said the review needs to address the issue of whether current funding is sufficient.
The Commission is expected to report to Government in December 2013.