$1.8 Billion

On 22nd May the Australian Government announced a $1.8 Billion package.  This week’s blog is all about the Australian Government as we analyse what this means for you.

Is that a lot of money for local government?
 
It may be but when you pull apart the announcement it is not what it seems.  If you have been following the blog for a while, you may remember I have previously said:
 
Don’t be confused by announcements which do not necessarily mean a grant program is open. The same grant program can be announced 2, 3 or more times before it is opened.
 
With this in mind I have tried hard to avoid reference to Utopia in the blog to date, but this announcement is straight out of the script.  I should add that this is exactly what Kevin Rudd did in the GFC.  I should know as I wrote the brief for his speech.  The new announcement sounds just so exciting though.

What was the announcement again?
 
The Federal Liberal and Nationals Government will deliver a $1.8 billion boost for road and community projects through local governments across Australia.
 
But it really isn’t what it seems.  Yes, there is $500 million for roads, which is great.  Every council will receive funds which has been calculated in a similar way to how the Roads to Recovery Program and the road component of the Financial Assistance Grants works. This formula takes into consideration road length and population and is based on recommendations of Local Government Grants Commissions.  
 
Explaining how Financial Assistance Grants works is a whole blog in itself.  If you need to know feel free to contact us.

But that leaves $1.3 Billion for ‘community projects’.  How do I apply? Are there guidelines? When does this open?  

Short answers are you cannot apply, there are no guidelines and it will not open.
 
What?
 
The $1.3 Billion is your council’s money that you were going to get as your annual financial assistance grants.  It is untied money i.e. there are no conditions attached, it is a core part of your council budget and factored into forward expenditure. It is not new. In fact, it is so old that your council has been receiving these funds since 1974 when former Prime Minister Gough Whitlam passed the early versions of the Financial Assistance Grants Act.  Your General Manager, CEO or Chief Finance Officer will know exactly how it is allocated which would have been decided as part of last year’s budget process.  Thus, you cannot apply as it is your money you were getting anyway. 

So why was there a big announcement?
 
A: You can probably answer that question yourselves.  What is different is that these funds have been bought forward and that councils can access these funds earlier. This may or may not been seen as a good thing as there might be changes to your annual budget process as a result. Over to your CFO on that one.  You do get extra road funding though which is great.
 
Just a little side story.  Colin was running the Financial Assistance Grants team during the GFC inside the AG and we did exactly this, we brought the payments forward.  Financial Assistance Grants are payed though State Governments and this change in payment arrangements in 2009 so incensed certain State Governments that they held onto the money and didn’t pass it on to councils until the scheduled payment.  Net impact by the Commonwealth announcement in those states – zero. 
 
So, what does all this mean?
 
A: We may not have been as kind as we could in our previous comments, but the announcement really is significant.  The reason is that until the last couple of weeks with the exception of Bridges, Heavy Vehicles and some smaller Arts programs, the Australian Government had not really mentioned Local Government as part of the response.  Most of the media have been that ‘business will lead the recovery’ with little if any reference to the vital and well documented role that councils play.  As this most recent media announcement says:

‘Prime Minister Scott Morrison said local governments were playing a critical role in responding to the impacts of COVID‑19. “Our funding boost will help councils accelerate priority projects that will employ locally and support local business and also stimulating our economy.”
 
These are the words we have been looking for, and based on the pathways to recovery of the GFC, expect more announcements soon.

We noticed sports grants are back in the news. What does this mean?

Yes sports grants and others are back in the news and the attention is clearly having an impact.  This is from an interview with the Deputy Prime Minister late last week.  These are his words:
 
Michael McCormack says ‘there is no need to worry about how these grants will be spent.
No colour coding. What they will be as councils will, for those councils who have already brought forward their projects and talked about their community priorities, that is going to be important, that we will take and assess those. The infrastructure department will be doing that.’
 
A return to fairness and equity regardless of where your council may be.  Enough said.

What are the states and territories doing?
 
Lots, and if you go back to last week you can see that many of the grant programs we mentioned have really only just opened.  More on the states and territories next week.

What should we do? 
    
Here are some ideas with our 3x3 for the week.
 
3 things to do this week: 

1. Find out your allocation for the $500 million roads component and let your engineering team know what the opportunities are (new).
2. Talk to your arts community as the chatter is increasing for potential support (new).
3. Scan your business and community for unexpected opportunities for future funding applications now that restrictions are being lifted.

 3 things to do over the next 3 weeks: 

1. Prepare your contractors, consultants and other suppliers for the expected increase in work now that we are opening up and more grants are on the way. (new).
2. With the easing of restrictions, open up more communication with environment and tourism and other groups on their needs and potential for support through State and Australian Government programs; (updated)
3. Continue with the selection of 2 or 3 projects council can actively pursue and commence the process of preparing these to be shovel ready.  These projects should be from the small and immediate such as footpaths and park restoration to major infrastructure.  Governments will be looking for all types of projects with a focus on immediate job creation.
   

 
3 things to do over the next 3 months:

1. Start to think of the next 6 to 12 months and how you will plan out delivery of your grants and projects. (new)
2. Prepare an external funding profile on what council can reasonably take on from external grants and funding from a financial, staff resource and/or contract perspective over the next budget cycle;
3. Complete the shovel ready preparation for the first 2 projects and move on to the next projects on the list.