Australian Local Government Association

Financing facts

Local government expenditure

Local government's expenditure is changing

The range and scope of local government functions has expanded over recent decades, moving beyond traditional local government services, such as roads and rubbish, to incorporate an expansive range of human services. In its 2001 review of the Local Government (Financial Assistance) Act 1995, the Commonwealth Grants Commission concluded that:

"…the composition of services provided by local government has changed markedly over the last 30-35 years and local government is increasingly providing human services (social welfare type services) at the expense of traditional property based services (particularly roads)".

In 2003-04, local government's total expenditure was $18.3 billion. Traditional services such as general public services and transport amounted to $7.3 billion or 40% of total expenditure. Human services such as health, social security and welfare, housing and community amenities and recreation and culture expenditure equalled $8.5 billion or 46% of total expenditure. Figure 1 shows this significant change in local government expenditure over the past 40 years.

Figure 1: Composition of local government expenditure, 1961-62 to 1997-98

Despite these increasing demands, local government's sources of revenue have remained unchanged resulting in a significant increase in the financial pressures faced by local councils.