A later than expected payment of Federal Government Financial Assistance Grants, which are administered by the State Government to local governments, has had an impact on the end of financial year position for Toowoomba Regional Council (TRC).

At the June meeting of Council TRC forecast an operating surplus of more than $800,000, however, late last week was informed the pre-payment of more than $7 million, which was budgeted to be received in the 2023-24 financial year, will now be received in the 2024-25 financial year.

The full payment will now be recorded as revenue in the 2024-25 financial year rather than being split across the two years. As a result, TRC will now likely finish the 2023-2024 financial year with an operating deficit with the final figure to be determined as part of end of month reporting.

Toowoomba Region Mayor Geoff McDonald, who spoke on a panel on cost shifting to councils at this week’s Australian Local Government Assocation (ALGA) National General Assembly in Canberra, said it was time to rethink the system.

“The change of timing this week in payments highlights the need for greater certainty as well as more funding going forward,” Mayor McDonald said.

“In reality, these unconstrained grants from the Federal Government should be renamed from Financial Assistance Grants to Financial Survival Grants,” he said.

“Maintaining aging infrastructure, while also building for growth is a challenge all councils are facing.

“Three cents in every dollar of taxation comes to local government, while research commissioned by the Australian Local Government Association reveals local councils own and maintain more than 33 per cent of community infrastructure.

“We are the level of government closest to our communities. The funding model we have just doesn't make sense. It is time for the Federal Government to revisit the way local governments are funded.

“We sincerely appreciate every dollar of funding we receive as it helps to build and maintain local pools, roads, libraries, cycleways and parks that are vital for our vibrant, local communities,” Mayor McDonald said.

“However, more needs to be done to help councils which are already struggling to meet an unprecedented burden of increased costs and cost shifting.

“This later than expected payment will likely see our Council record a deficit for 2023-24 which highlights how essential these grants are to our operation.

“We have taken a cautious financial approach to our Budget this year and our planning for the future. We want our Region to continue to grow and prosper.”

While there has been an impact on Council’s financial position, TRC has been assured it will be audited based on the five-year averages, which should smooth the year-on-year impacts of the timing of the payments.

Council will also adjust next year’s Budget figures through the September budget review process and incorporate the payments. Council expects to maintain its credit rating as Sound with a Neutral Outlook.