Hay Shire Council has joined other Local Government Areas in their bid for a fair distribution of Financial Assistance Grants (FAGs) from both the Federal and State Governments.

General Manager, David Webb said there is a general belief that the current model favours metropolitan regions over rural and remote councils.

Mr Webb said given the serious and ongoing financial sustainability challenges in rural and regional councils across NSW, Hay Shire Council seeks a better approach to the distribution of the grants by the NSW Government, through the NSW Grants Commission.

He said this would ensure funds are allocated to those councils whose ability to raise own source revenue is restricted by their regional and remote location, sparse population and declining rate base.

“FAGs are critical to Council’s financial sustainability and account for approximately 38 per cent of Council’s income, excluding capital grants,” Mr Webb said.

“Council has benefited from an increase in FAGs over the preceding years.

“For context, in 2024/25 our rate income of $2.8M is 60 per cent of that which we receive from FAGs ($4.6M).

“The own source revenue ratio metric is used by the NSW Government to compare financial sustainability of councils.

“It measures the ability of councils to generate their own revenue.

“In 2024/25, Hay Shire Council’s own source revenue ratio was approximately 30 per cent compared to a New South Wales Government benchmark of a minimum of 60 per cent.

“In real terms, this means seventy per cent of Council’s revenue ($6.3M) is sourced from external grants, tied and untied, to deliver our delivery program and meet the community’s vision and service level expectations.

“In the same year, 80 per cent of our capital works program ($12.2M) was funded by external grant sources.” The theme of a recent meeting of the Country Mayors Association, attended by Mr Webb and Cr Oataway, was Financial Sustainability.

“The CMA Board has been advocating strongly for our adopted position of restoring Financial Assistance Grants to one per cent without affecting other grant offerings,” Mayor Oataway said.

“Currently FAGs sits at 0.53 per cent of Commonwealth Taxation Revenue.”

applauded the NSW Government for initiating the inquiry into Local Government’s ability to fund infrastructure and service,” Cr Oataway said.

“Chairman of the NSW Country Mayors Association, Mayor Rick Firman has bemoaned the major parties’ lack of commitment to Local Government and their failure to address funding shortfalls that were clearly identified in the Interim Report into Local Government Sustainability.

“Country-based councils across NSW face unique cost pressures with many Local Government Areas the size of small European countries.

“Councils are required to deliver public services like administration, recreational facilities, pools, libraries and waste facilities in multiple locations in order to ensure equity of access, which increases the cost of council operations.”

Hay Shire Council resolved at its meeting last month to submit motions to both the Australian Local Government Association 2025 National General Assembly and the Local Government New South Wales 2025 annual conferences for a review and correct implementation of the FAGs