The 2021-2022 Federal Budget - Local government overview

Published: 12th May 2021

The Morrison Government’s 2021-22 Budget forecasts a $106 billion deficit in 2021-22, 4.25% economic growth and the unemployment rate to fall to 4.75% by the June quarter of 2023. The Budget prioritises getting Australians through COVID-19 and securing Australia's economic recovery for the future.  

Items of particular interest for councils include:

Financial Assistance Grants

  • In 2021-22 the Australian Government will provide $2.6 billion in Financial Assistance Grants funding to councils. This includes $1.3 billion which was brought forward from the 2021-22 estimate and paid to States and Territory Governments in 2020-21. The remainder is $1.326 billion in 2021-22.   
  • Queensland councils will receive a total of $261.9 million, a marginal increase on the $244.2 million received in 2020-21.  
  • FAGs continue to comprise two components: general purpose assistance grants and untied local roads grants. In 2021-2022, Queensland councils will receive a total of $261.9 million, including $185.6 million from the General Purpose Component, and $76.4 million from the Local Road Component.  
  • Financial Assistance Grants remain at 0.6% of the Commonwealth’s estimated taxation revenue.  
  • More information about FAGs funding arrangements can be found here.


  • The Local Roads and Community Infrastructure Program (LRCIP) has been extended from two to four years, bringing the Government’s total commitment to this program to $2.5 billion, with an additional $1 billion announced in this year’s Budget. 
  • In addition to LRCIP funding, Queensland will receive $299.2 million in local roads funding – a $60 million funding boost from 2020-21. Funding includes:  
    • $499.5 million for Roads to Recovery funding including $102.4 million for Queensland 
    • $137 million for Black Spot funding including $27.1 million for Queensland
    • $407.6 million for Identified Local Roads Grants including $76.4 million for Queensland
    • $88.5 million for the Bridges Renewal Program, including $23.3 million for Queensland. 

Regional Development

  • $348 million over four years from 2021-22 for a package of measures to support regional Australia’s sustainability, resilience and job creation. Funding includes:  
    • $256.5 million over four years from 2021-22 for round six of the Building Better Regions Fund to support investment in community infrastructure and capacity building projects in regional areas  
    • $84.8 million over two years for the Regional Connectivity Program including $68.5 million targeted towards digital connectivity in Northern Australia and remote indigenous communities
    • $258 million, including up to $160 million through the National Water Grid Connections pathway, from the $3.5 billion National Water Grid Fund towards the construction of new and augmented water infrastructure projects, building a more resilient and secure Australia
    • $6.1 million over two years from 2021-22 to establish the Rebuilding Regional Communities program to assist community organisations and small enterprises in regional Australia to recover from the impacts of COVID-19
    • $0.6 million in 2021-22 to undertake a scoping study into establishing Australian Public Service Hubs in regional Australia
    • support to undertake an independent study to identify the regulatory barriers to business relocation into regional Australia. 

Northern Australia

  • $189.6 million over five years for a package of measures to support Northern Australia including:  
    • $111.9 million over five years from 2021-22 to establish a Northern Australia Development Program to support businesses to scale-up projects into commercial outcomes by providing co-investment funding and an advisory service  
    • $68.5 million over two years from 2021-22 to deliver targeted digital connectivity solutions in Northern Australia through dedicated funding under the Regional Connectivity Program and the Mobile Black Spot Program  
    • $9.3 million over five years from 2021-22 to implement and evaluate a pilot Regions of Growth program to provide on-ground resources in four geographic regions in Northern Australia to focus investment, job creation and business growth. 
  • The Government has also committed to a $10 billion reinsurance pool to cover cyclone and related flood damage in Northern Australia to commence from 1 July 2022 and allocated $40.3 million over three years for a pilot program to fund cyclone risk mitigation works for strata title properties in North Queensland (see disaster mitigation). 

Disaster Mitigation & Climate Resilience

$1.2 billion over five years to improve Australia's capability to better prepare for, respond to, and recover from natural disasters. The Government has already announced the establishment of a new national agency to help support local communities respond to large-scale natural disasters and undertake new initiatives to manage the impact of future events and the changing climate.  

This will see the separation of the Government's response and recovery functions, with Emergency Management Australia (EMA) in the Department of Home Affairs to co-ordinate responses to national emergencies and a new National Recovery and Resilience Agency (NRRA) to lead resilience to and recovery from hazards and disasters. Both agencies will work closely with state and territory counterparts. Other key disaster mitigation funding announcements include:   

  • $615.5 million over six years from 2021-22 for the Preparing Australia program to provide grants for projects that support public and private disaster risk reduction and resilience.  
  • $61.1 million over four years from 2021-22 to establish the NRRA to lead Commonwealth and national efforts to improve preparedness for and recovery from natural disasters and other hazards, and consolidate existing Commonwealth functions related to relief, resilience and recovery (including functions from the National Drought and North Queensland Flood Response and Recovery Agency, the National Bushfire Recovery Agency and EMA). 
  • $40.3 million over three years from 2021-22 for a pilot program implemented with the Queensland Government to fund cyclone risk mitigation works for strata title properties in North Queensland. 
  • $209.7 million over four years to establish the Australian Climate Service to transform the Commonwealth's capacity to anticipate and prepare for more extreme weather events due to a changing climate, and inform risk reduction and resilience investments.  
  • $90.0 million over four years from 2021-22 to enhance EMA's operating model to improve its ability to manage national natural disasters, including through strengthening the Australian Government Crisis Coordination Centre.  
  • $4.5 million over two years from 2021-22 for a national recovery capability package to uplift recovery and resilience capability at the local, regional and national level.  
  • $2.2 million over two years to design a cell broadcast national messaging system to provide information to the Australian public concerning events of national significance. 

Drought Response, Resilience and Preparednes Plan

  • $212.2 million over four years including for a package of measures to continue support for farmers and communities to manage drought. Funding includes $172.5 million over four years through the Future Drought Fund to continue a range of programs and activities to support the long-term drought resilience and preparedness of primary producers, rural and regional communities and local governments, including through Federation Funding Agreements.  


  • $29.1 million to support communities to manage established pests and weeds.  
  • $9 million to establish an independent Environment Assurance Commissioner.  
  • An Oceans Leadership Package which commits: 
    • $30.6 million for restoring ‘blue carbon’ ecosystems like seagrass and mangroves that play a key role in drawing carbon out of the atmosphere, improving the health of coastal environments domestically and regionally, and protecting native species and habitat. Part of this package will support on-ground restoration activities  
    • $11.6 million over four years from 2021-22 to expand and create new Indigenous Protected Areas that provide greater coverage of Sea Country, protect marine biodiversity and create additional employment opportunities for Aboriginal and Torres Strait Islander people. 

Waste & Resource Recovery

  • $11 million over four years to incentivise recycling behaviours. 
  • $59.8 million over four years for an Organic Waste – Food Waste for Healthy Soils Fund. 
  • $7.2 million over four years for a community and education program.   

Federal Budget Documents can be accessed here.