The Commission applies the National Principles when making its calculations.
A full explanation of the Commission’s methodology used to allocate the General Purpose Grants can be found in the Commission’s Annual Reports.
The calculations in these sheets should take into account the following information.
Units of Measure (UOM) - the Commission uses property values as the units of measure for the revenue calculations. The Commission uses capital values in its calculations and assesses 5 separate land use types (residential, commercial, industrial, rural and other). Valuation data is provided by the Valuer-General, which is adjusted by the Commission to account for the exemptions and rebates provided under the Local Government Act 1999.
The SEIFA (Socio Economic Index for Areas) – the Commission uses the SEIFA from the ABS as a measure of capacity to pay and adjusts (increases or decreases) the units of measure for the residential and rural revenue calculations to account for relative advantage or disadvantage compared to the average across the State. The index is centred around 1. An index of below 1 indicates a reduced capacity to pay and an index above 1 indicates an increased capacity to pay.
Standard Rate in the Dollar – the Commission applies a standard rate in the dollar across each of its 5 its revenue assessments by dividing the total rate revenue across the State by the total valuations across the State (by land use type).
Subsidies – the Commission assesses “of right grants” provided to all councils in the subsidies assessment. Currently, of right grants included in the subsidies assessment includes only the identified local road grants and libraries grants. “Special effort” grants (grants applied for by councils or awarded by a competitive process) are not included in this assessment.
Units of Measure – these measures are used by the Commission to determine the relative difference between all councils and the average across the State using the unit of measure as a “driver” of service delivery that is independent of the policy decision making process of individual councils, in accordance with the National Principles.
Standard Costs – the Commission applies a standard cost across each expenditure function assessed by dividing the total net cost of the function by the total units of measure. This calculation provides the standard cost of providing the service assessed, per unit of measure.
CRI (Cost Relativity Indices) – the Commission applies CRI’s to expenditure assessments to take account of relative advantage or disadvantage for factors outside council’s control. For example, waste management has a “distance of collection route” CRI, which allows councils with longer to travel to collect waste have that disadvantage recognised in the expenditure assessment for waste management.
Equal Per Capita Scale Back Percentage – this is the proportion of the pool of available funding that each non per capita minimum council would receive if the Commission did not use constraints (caps and collars) to manage changes in grants. This is the proportion of the pool that the Commission “aims” to achieve, but does so by adjusting changes in grants using a gradual or phase in allocation process.
Raw Calculation Summary – the raw calculations for the revenue assessments, subsidies assessment and expenditure assessments are summed to provide a total raw calculation. The raw calculation applies the National Principle of horizontal fiscal equalisation, as per the Act and as set out in the Commission’s Annual Report. This is the mechanism by which the Commission determines the relative need for each council compared to the State average.
- A negative total raw calculation indicates greater than average capacity and councils with a negative total raw calculation receive a per capita minimum grant.
- A positive total raw calculation indicates that a council has a below average capacity to provide services and needs grant assistance.
The raw calculation summary provides an indication of the “share” of the available pool of funds from the Commonwealth to which those councils are entitled. The raw calculations at this point do not represent a final grant entitlement -these calculations allow the Commission to identify per capita minimum councils and the proportion of the pool of general purpose grants payable to councils with an assessed need for grant assistance.
Per Capita applied Calculation Summary – the per capita applied calculation summary (highlighted in yellow) provides for the allocation of grants to per capita minimum councils, determines the remaining pool of funding available for distribution amongst non-per capita minimum councils and provides the Commission with information about increasing or decreasing grants for non per capita minimum councils from one year to the next. The per capita applied calculations do not represent a final grant entitlement. These calculations allow the Commission to understand the amount available in the grant pool after grants are allocated to per capita minimum councils and changes in grants for non per capita minimum councils.
Estimated Grant Summary – the estimated grant summary (highlighted in green) represents the Commission’s final grant allocations and forms the basis of its recommendations to the Minister. The final grant allocations include the Commission’s recommendations for changes in grants from one year to the next for each council and the application of constraints (caps and collars) to manage changes in grants.