Methodology

The State Grants Commission is required to apply the National Principles issued under the Local Government (Financial Assistance) Act 1995 when making its recommendations for the distribution of the Financial Assistance Grant funding. There are six National Principles that apply to the distribution of the Base Grant funds and one National Principle that applies to the distribution of the Road Grant funds. The National Principles are detailed in Attachment 1 of the State Grants Commission Financial Assistance Distribution Methodology Paper.

The overarching principle the Commission is required to apply for determining the distribution of the FAG funding among councils is full horizontal fiscal equalisation (HFE). HFE is a reference to the allocation of funds in a manner that:

  1. ensures that each local governing body in a State is able to function, by reasonable effort, at a standard not lower than the average standard of other local governing bodies in the State; and
  2. takes account of differences in the expenditure required to be incurred by local governing bodies in the performance of their functions and in their capacity to raise revenue. 

The Commission must also ensure that no less than 30 per cent of the general purpose grant funding is distributed to all councils on a per capita basis.

In applying the National Principles, the Commission has developed its own State Principles that it applies to its decision making and recommendations. These are detailed in Attachment 2 of the State Grants Commission Financial Assistance Distribution Methodology Paper.

Full details of the Commission's current methodology can be found in the State Grants Commission Financial Assistance Distribution Methodology Paper on the Publications page.

Current Assumed Allowances and Component Rates

Underpinning the Commission's methodologies are some allowances and component rates that the Commission uses to help determine the allocation of the financial assistance grants.  Some of the rates are updated annually to ensure they reflect current cost profiles, whereas others are updated periodically as determined appropriate by the Commission.

Rates used in the Base Grant Model

The current Expenditure Allowances, and the recipient councils, that the Commission used for making its 2018-19 Base Grant recommendations, were as follows:

Allowance DescriptionAllowance AmountRecipient Councils
Provision of services in support of medical general practitioners (GP practice allowance)$40 000 per practice

Central Highlands (x2)

Glamorgan Spring Bay (x3)

Huon Valley (x2)

Kentish (x1)

Tasman (x1)

Provision of airport services (Airport allowance)$70 000 per airport

Flinders

King Island


The allowances are included in the calculation of a council's expenditure requirement where the cost of providing a service is not adequately captured by standardised expenditure as a measure of recognition of a need, but are not a full reimbursement of the costs, of those councils providing these services. 

Rates used in the Road Grant Model

The Road Grant Model the Commission uses standard road and bridge profiles for determining the asset preservation cost of a standard kilometre of road length by road type and per metre squared of bridge deck area by bridge and culvert type.

The Road rates used in determining the 2018-19 Road Grant distributions are detailed in Table 11 of the State Grants Commission 2018-19 Financial Assistance Grant Data Tables.

The Bridge rates used in determining the 2018-19 Road Grant distributions are detailed in Table 12 of the State Grants Commission 2018-19 Financial Assistance Grant Data Tables.

Urbanisation Allowance

An Urbanisation allowance is used in the Commission's Road Preservation Model (RPM) as recognition that urban roads in the central business districts of councils are significantly more complex, engineered to a much higher standard and have shorter life spans than the standard road profile, and the asset preservation costs are accordingly materially greater. 

The Commission applies the allowance by multiplying the eligible road length by a pre‑determined factor, thereby recognising an increased road length for calculating the asset preservation needs of councils for maintaining their road networks.  The Commission currently applies a factor of “3 times", which results in every kilometre of eligible road length being counted as 3 kilometres of urban road length.

The Commission uses an Urbanisation Allowance Checklist, which details both essential characteristics, which requires a 100 per cent satisfaction mark, and Other characteristics, for which a 75 per cent satisfaction mark needs to be achieved, in order for a section of road to qualify as eligible for the Urbanisation Allowance. 

The Checklist can be used by councils to assess and review sections of roads for eligibility, and can advise of any changes to their road lengths as and when required in the future.

The Annual deadline for any updates in eligible road lengths for inclusion in the forthcoming year's grant determinations is 31 May.

The total road lengths recognised as qualifying for the Urbanisation  Allowances, and the recipient councils, that the Commission used for making its 2018-19 Road Grant recommendations, were as follows:

CouncilRecognised Urban Road Length
Burnie 
4.291km
Clarence 1.322km
Devonport 6.300km
Glenorchy 
2.896km
Hobart 
6.906km
Launceston 
9.271km

 

Urbanisation Checklist download

To download a copy of the Urbanisation Checklist, please click here:

  Urbanisation allowance - checklist for CBD roads   (68Kb)

Triennial Reviews

The Commission adopts a triennial review process whereby major method changes are incorporated into its assessments only every three years, with data updates and minor methodological revisions incorporated each year.

The current triennium spans the years 2016-17 to 2018-19. The 2018-19 distribution is the third and final year of the 2018-19 Triennial Review. This means that for determining the 2018-19 allocation of funds as well as incorporating data updates, the Commission has implemented methodology changes that it has deemed appropriate. 

Details of the methodology changes implemented for determining the 2018-19 distributions are explained in Section 4 of the State Grants Commission 2017-18 Annual Report, including 2018-19 Financial Assistance Grant Recommendations.

The Commission also periodically publishes its work plan to detail which aspects of its methodologies it expects to review over the current triennium, and report on the status or progress of any reviews. These publications are available on the Publications page.​



Contact

The Executive Officer
State Grants Commission
GPO Box 147
HOBART TAS 7001
Phone: 03 6166 4274
Fax: 03 6233 5690
Email: SGC@treasury.tas.gov.au

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