Councils call for funding to rebuild towns

The councils want "fair increases" to funding in the federal government's financial assistance grants.

The grants are important for local government budgets as they fund more than 20 per cent of operating costs for around one in four Australian councils every year.

More than 500 local governments around the country have called for funding to be raised to one per cent of Commonwealth tax revenue.

In 2022-2023, local governments received about half that amount through financial assistance grants or 0.52 per cent.

Australian Local Government Association president councillor Linda Scott said many local governments relied on financial assistance grants to remain sustainable and urgently needed an increase in the untied funding.

"Australian councils are facing significant financial challenges, especially in the wake of recent natural disasters," councillor Scott said.

Before the federal election in May 2022, Labor committed to increase funding through financial assistance grants as part of a wider plan to provide "long-term financial sustainability of local government".

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"Restoring financial assistance grants to at least one per cent of Commonwealth tax revenue would be throwing councils a much-needed lifeline," councillor Scott said.

"The government campaigned on fair increases to financial assistance grants, and we want to see the first round of increases when they deliver their first full Budget in May this year," councillor Scott said.

The grants are untied, so local governments can spend funding on issues and priorities specific to the community.

Local governments are encouraged to spend funding on resources to support their towns including community services, infrastructure, recreation and culture, she said.