Mr McClelland asked the Minister for Sport, Territories and Local Government, upon notice, on 13 May 1997:

(1) What local government grants were made to the local government councils of (a) Hurstville (b) Kogarah and (c) Rockdale in NSW in (i) 1995-96 and (ii) 1996-97.

(2) How were the grants calculated.

(3) Is the Government reviewing the level and manner in which financial assistance grants to local

government councils are to be paid; if so, what changes are being considered.

(4) Will the Government further reduce financial assistance grants paid to local governments; if so, by what sum.

(5) Will local government financial assistance grants be paid directly to State governments rather than local governments.

Mr Warwick Smith —The answer to the honourable member's question is as follows:

(1) The grants made to the councils were:

The grant entitlement for councils is calculated according to the provisions of the Local Government (Financial Assistance) Act 1995 which broadly provides that the grants are adjusted in line with movements in the State general revenue assistance which in turn are subject to a rise/fall adjustment for inflation and population growth. As a result, the actual entitlement cannot be finally determined until the end of the financial year when these variables are known. Because of this, councils are paid on the basis of an estimated grant entitlement. The grant actually paid to a council in a particular year reflects the estimated grant entitlement and adjustments for under or over payments from the previous year.

(2) The determination of the quantum of the grants and the calculation of the distribution of grants between States is in accordance with the provisions of the Local Government (Financial Assistance) Act 1995. The grants provided to individual councils within a State are determined by the Local Government Grants Commission in that State. Grants Commissions are required to use methodologies for distributing grants that are consistent with the requirements of the Act. The methodologies used by the Local Government Grants Commissions for 1995-96 are contained in the Local Government National Report which was tabled in Parliament on 6 December 1996.

(3) The Government is not currently reviewing the provisions of the Local Government (Financial Assistance) Act 1995 which sets out the level and manner in which grants are paid to councils. In accordance with the provisions of the Act, the Treasurer will determine in June 1997 the escalation factor for 1996-97 so that the actual entitlement for 1996-97 can be calculated.

(4) In 1996-97, Local Government was paid $1.216 billion in financial assistance grants. This comprised an estimated entitlement of $1.211 billion and an underpayment from the previous years of $5 million. Because of lower than expected inflation in 1996-97, the actual entitlement for that year is now expected to be about $1.204 billion, a reduction of around $8 million on the estimated entitlement.

In 1997-98, Local Government is expected to be paid $1.205 billion in financial assistance grants. This comprises as estimated entitlement of $1.212 billion, an increase of $9.3 million over the expected actual entitlement for 1996-97, less the overpayment of around $8 million in 1996-97.

In 1997-98 and subsequent years, the financial assistance grants to local government will be calculated in accordance with the provisions of the Act. The Act provides a link between the financial assistance grants paid to local government and general revenue assistance grants paid to the States.

(5) Under the Act, the financial assistance grants must be paid as tied payments to the States. The grants must be passed on by the State to councils without undue delay and as unconditional payments. The Government has no plans to change the Act.