How is your local council funded?
To provide the many services that you use, councils need considerable financial resources.
Councils need to buy machines and vehicles, materials to build roads and bridges, and books for libraries.
It also costs money to maintain parks and swimming pools, and councils also have to pay the wages of administration and clerical staff, environmental officers, drivers, maintenance workers, youth workers, inspectors, engineers, planners and librarians.
Councils with large populations may have annual budgets worth hundreds of millions of dollars, while smaller councils will have less money to spend.
Councils have four main sources of income:
Much of a council’s income comes from taxes on property (land and buildings), called rates.
Each year, owners of property - including houses, farms and businesses - must pay rates to the council. The amount paid depends on the value of their property.
For example, the amount of rates paid by the owner of a house or flat will usually be much less than the amount paid by the owner of a large, more valuable property or business.
Another way councils collect money is by charging a fee for some of their services.
Usually, the charges will be used pay for the supply the service – like the fees for your household wheelie bin garbage and recycling collection.
You may be charged to dump rubbish at the waste depot, swim in the public pool or use other recreational facilities. You must pay to have a building application approved and to register your dog.
Fines are paid to councils when people break council laws. For instance, if a car is parked incorrectly, the owner or driver may be fined.
Councils also receive money from the state or federal governments. This money is called a grant, or subsidy. In some cases, councils can decide themselves how they will spend the grant.
At other times the state or federal governments will determine how the money has to be spent. For example, a grant to protect the sand dunes at the local beach can’t be used to buy more books for the library.
Sometimes councils decide to provide a major service or facility, such as a new recreation centre. Such major projects are very expensive and will be there to serve communities for many years. Councils have to carefully consider where they will obtain the funds to pay for them.
Sometimes they will borrow the money for such a project if they can’t afford to pay for it all at once. The council must eventually pay this money back, with interest.
This means that the council can pay for the project over many years without having to cut back on other services it provides. It also means that people who benefit in future from the project will contribute as well as those paying rates at the time the project starts.
Councils deal with large amounts of money each year. They must have a written plan for how it uses its money, called a budget. The council must also keep a record of all its receipts (income) and expenditure (expenses) each year – their annual financial statements. Budgets and financial statements are available to the public.