Methodology

Allocation of Funds

The Commonwealth Local Government (Financial Assistance) Act 1995 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.

Methodology Review

Following a request from the then Minister of Local Government in 1998, the Northern Territory Grants Commission (NTGC) commenced a comprehensive and detailed review of the methodology used to distribute Commonwealth general purpose and identified roads financial assistance grants, and of the processes of the Commission.

However, because of the review of the Local Government (Financial Assistance) Act 1995by the Commonwealth Grants Commission at the request of the Commonwealth, the Commission postponed final consideration of the methodology pending outcome of that review.

During the 2001-02 year the Commission considered an options paper regarding the finalisation of our review. A discussion paper was prepared and released to local governments for submissions in October 2002 and was followed by workshops in most regional centres. Nine submissions were received and presented at the Local Governemnt Association of the Northern Territory (LGANT) meeting in Alice Springs in February 2004.

In January 2005, the Commission released a progress report and a summary of submissions received to local governing bodies and followed with workshops in Darwin, Katherine, Tennant Creek and Alice Springs. At these workshops a working paper, which formed the basis of this report, was presented to councils.

In March 2005, public hearings were held in Darwin and Alice Springs to enable interested parties to make final submissions to the Commission.

During the 2005-2006 year the Commission looked at the expenditure categories and cost adjustors in use in order to conclude the review of the methodology. It was resolved that the expenditure categories be expanded to the nine Australian Bureau of Statistics (ABS) categories and that the cost adjustors be rearranged to apply to those categories.

The review highlighted the need for a regular process of continual improvement to further refining the revenue and expenditure categories and appropriate cost adjustors.

In 2006-2007 the Commission continued to apply its revised methodology. The allocations for the 2007-2008 year were the third year of a five year phase-in period. In 2007-2008 the Minister for Local Government announced New Local Government in the Northern Territory.

As a result the Commission issued a discussion paper to invite comments from interested Local Governing Bodies on the options available to the Commission in developing a methodology that adapts to the changed structure. The paper highlighted the need for the Commission to re-visit and amend the cost adjustors that are used in the methodology.

In May 2005, the Final Report was approved.

1998
Discussion Paper - Review of Financial Assistance Grants Methodology Recommendations

2002
Discussion Paper - Summary of submissions received (pdf 144Kb)

2005
Final Report - NTGC Methodology Review Final Report (pdf 83Kb)

2007
The Effect of Local Government Reform on the Grants Commission Grants Distribution Methodology (pdf 1.4Mb)

2008
NT Grants Commission Methodology for 2008/09  (pdf 37Kb)
Further Discussion Paper on Refining the NTGC Methodology  (pdf 744Kb)
General Information

National Principles for the Allocation of General Purpose and Local Road Grants

A.
The National Principles relating to the allocation of general purpose grants payable under section 6 of the Local Government (Financial Assistance) Act 1995 (the Act) 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.
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.