Methodology of NT Grants Commission

Allocation of funds

The Commonwealth Local Government (Financial Assistance) Act 1995 (the Act) sets out the conditions governing the payment of grant money from the Commonwealth to the States and Territories.

The Northern Territory receives approximately 1% of the total amount of Commonwealth grant money. This amount is divided into General Purpose Grant money and Road Grant money.

For General Purpose Grant funding, the NT Grants Commission is required to apply the principle of Horizontal Equalisation (as defined by Act) to ensure that NT local government councils function around the "average standard" of other local governing bodies in the Territory. That imperative means the NT Grants Commission must take into account differences in the cost of providing services and the capacity of those local governing bodies to raise their own revenue.

Read below to find out more about:

National Principles

A. Allocation of General Purpose component

The National Principles relating to the allocation of general purpose grants payable under section 6 of the Local Government (Financial Assistance) Act 1995 among local governing bodies are as follows:

1. Horizontal Equalisation

General purpose grants will be allocated to all local governing bodies, as far as practicable, on a full horizontal equalisation basis as defined by the Act. This is a basis that ensures that each local governing body in the State/Territory is able to function, by reasonable effort, at a standard not lower than the average standard of other local governing bodies in the State. It takes account of differences in the expenditure required by those local governing bodies in the performance of their functions and in the capacity of those local governing bodies to raise revenue.

2. Effort Neutrality

An effort or policy neutral approach will be used in assessing expenditure requirements and revenue raising capacity of each local governing body. This means as far as possible, policies of individual local governing bodies in terms of expenditure and revenue effort will not affect the grant determination.

3. Minimum Grant

The minimum general purpose grant allocation for a local governing body in a year will not be less than the amount to which the local governing body would be eligible to receive if 30% of the total amount of general purpose grants to which the State/Territory is entitled under section 9 of the Act in respect of the year were allocated among local governing bodies in the State/Territory on a per capita basis.

4. Other Grant Support

Other relevant grant support provided to local governing bodies to meet any of the expenditure needs assessed should be taken into account using an inclusion approach.

5. Aboriginal and Torres Strait Islanders

Financial assistance shall be allocated to councils in a way which recognises the needs of Aboriginal and Torres Strait Islanders within their boundaries.

6. Council Amalgamation

Where two or more local governing bodies are amalgamated into a single body, the general purpose grant provided to the new body for each of the four years following amalgamation should be the total of the amounts that would have.

B. Allocation of identified roads component

The National Principle relating to the allocation of the amounts payable under Section 12 of the Act (the identified road component of the financial assistance grants) among local governing bodies is as follows.

1. Identified road component

The identified road component of the financial assistance grants should be allocated to local governing bodies as far as practicable on the basis of the relative needs of each local governing body for roads expenditure and to preserve its road assets. In assessing road needs, relevant considerations include length, type and usage of roads in each local governing area.

Last updated: 03 June 2022

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