Brimbank council is expected to lose millions of dollars in federal government funding over the next three years.
Last month’s federal budget included a hold on indexation for financial assistance grants given to local councils to fund vital services.
The freeze is expected to last for the next three financial years.
Financial assistance grants include a general purpose component, distributed between the states and territories according to population, and an ‘identified local road component’ for which funds are distributed between states and territories according to fixed historical shares. Each council can spend its share as it chooses.
Brimbank received more than $13 million in financial assistance grants in 2013-14.
A spokeswoman said the council was still reviewing the implications of the changes and was not in a position to comment.
But Wyndham mayor Bob Fairclough said his council stood to miss out on $2.7 million next financial year and about $10 million over the next three years.
He said the cuts would force the council to review its spending.
Opposition Leader Bill Shorten said the decision would leave Brimbank council with less money to maintain roads and deliver essential community services.
“Assistance for councils will no longer be indexed in line with the consumer price index or population increases,” Mr Shorten said.
“Councils will be forced to look at other ways of making ends meet, including increasing council rates, reducing services for local residents, considering staffing cuts and increasing charges and fees.”
Municipal Association of Victoria president Bill McArthur said federal financial assistance grants were a core revenue stream for local government.
“Councils have only one form of own-source revenue: rates,’’ he said.
‘‘Such a significant cut in federal funding leaves councils with two choices: cut services or increase rates.”
Federal Infrastructure and Regional Development Minister Warren Truss’s office did not respond to requests for comment.
