Joe Hockey
Joe Hockey

Local councils reject budget cuts

MAYORS from across Australia have urged the Abbott government not to proceed with almost $1 billion in cuts to key financial grants, and reverse its budget decision to stop indexing the grants.

At the first day of the Australian Local Government Association's national congress in Canberra, an "urgent motion" was put to the meeting to stop the cut.

The $925 million cut will take the form of a freezing of indexation rises to financial assistance grants - a key fund that gives councils money to pay for new roads and maintain existing infrastructure.

But the more than 500 local councils across the country, many preparing for their own budgets in coming weeks, resoundingly rejected the federal government's change on Monday.

The motion passed at the meeting called on the government to restore the indexation of the grants, in line with long-standing practice.

Under questioning in Senate budget estimates, Commonwealth public servants were also unable to explain what the actual effects of the cut would be on councils.

However, ALGA president, Mayor Felicity-ann Lewis has been critical of the funding change, as council's fear it will either result in fewer local services or more rates rises.

The three-year freeze on payments is also expected to have a bigger impact on rural and regional councils, where the ratepayer base is smaller and costs are generally higher.

More than 900 local councillors and council staff are in Canberra for the national congress, with a host of issues, many focused on the budget, on the agenda.