Understanding Council Grants: What’s Changed and Why It Matters?

Published on 03 July 2026

Since the release of Council’s draft 2026/27 budget — and the announcement of a projected operating deficit of $2.7 million — many people in our community have been asking what has changed and what has contributed to this position.

One important part of that story is grant funding.

Over the past few years, councils across Australia benefited from significant one-off funding through COVID-19 stimulus programs, natural disaster recovery initiatives and other targeted State and Federal grant programs. These programs provided unprecedented investment in local communities and helped councils deliver projects that may not otherwise have been possible.

As those one-off funding programs have wound down, the grant landscape has changed significantly. With budgetary pressures also being felt at State and Federal government level, there are now fewer grant opportunities available, competition for funding has increased, and many grants have become more targeted and restrictive.

Understanding these changes helps explain why Council’s financial position looks different today than it did just a few years ago. While grants remain an important source of funding for specific projects, they are no longer available at the same scale and cannot be relied on to support Council's long-term financial sustainability.

A Changing Grant Landscape

One example of this shift is the Australian Government’s Financial Assistance Grants program. In the 2026/27 Federal Budget, the share of Commonwealth taxation revenue allocated to local government through this program reduced from 0.51 per cent to 0.49 per cent.

While this change may appear small, it is significant when considered across the local government sector. Federal and state funding combined typically accounts for around 30 per cent of council revenue, so even relatively small reductions can have a noticeable impact on councils' ability to maintain services and deliver infrastructure.

Locally, this is also reflected in Temora Shire Council's capital grant funding, which has decreased from approximately $10 million in 2024/25 to around $134,000 in 2026/27. This reflects the completion of major funded projects and the reduction in large-scale grant programs that were available in recent years.

This change can also be seen in the types of grant-funded projects delivered in recent years through COVID-19 stimulus and recovery-related programs.

Local examples include:

• Community Events program – which funded the first Drench Festival and T-Lights at Lake Centenary
• Stronger Country Communities Program – which funded upgrades to the Temora Recreation Centre amenities, new Bob Aldridge Change Room, Nixon Park amenities upgrades, Temora Soccer Ground amenities upgrades
• Regional Drought Resilience Planning Program – which funded the development of our Drought Resilience plan and the delivery of implementation activities, such as The Resilience Project delivered in local schools

Where Council Grant Funding Comes From

Councils receive grant funding from several main sources:

Federal Government
Programs such as Financial Assistance Grants and Roads to Recovery provide funding to councils across Australia. Some of this funding is flexible, but most is provided through specific programs with set conditions.

State Government
State governments provide grants for infrastructure, community services, environmental projects, emergency recovery and many other initiatives. These are generally tied to specific purposes and conditions, meaning Council is unable to allocate the grant funds to operational costs or other projects.

Other Programs and Partnerships
Councils may also access competitive grant programs or work in partnership with other organisations, including not-for-profits and agencies, to deliver targeted projects.

Not All Grants Are the Same: Untied vs Tied Funding

A common misconception is that councils can apply for funding for general community needs and decide later how to spend it.

In reality, this is rarely how grant funding works.

Untied Funding is limited and can be used at Council’s discretion. Financial Assistance Grants are the main example.

Tied Funding must be spent exactly as outlined in the funding agreement and cannot be redirected to other priorities.

For example:

• A road safety grant can only fund approved road safety treatments
• A youth services grant must deliver a specific program to an identified group
• A facility upgrade grant cannot be used for unrelated infrastructure needs

This is why residents may see investment in one area while another project has to wait. It reflects the conditions attached to the funding, rather than Council choosing one project over another.

Local examples include:

• Restart NSW funding to upgrade Howards Road at Reefton
• Stronger Country Communities funding to upgrade the Bundawarrah Centre
• Places to Play funding for a nature-based adventure and water playspace at Bradley Park

Some grant programs may also require works to be delivered by private contractors rather than Council, as a way of stimulating the local economy. This can reduce Council’s flexibility in how projects are delivered and may also affect project costs.

Local examples include:

• Building Better Regions funding to upgrade the runway, taxiways and stormwater infrastructure at Temora Airport.

Grants Must Meet Very Specific Criteria

Many grant programs are designed with narrow eligibility criteria that reflect broader state or federal policy objectives. This means councils cannot apply for general funding for broad community needs — projects must be designed to meet detailed program requirements.

For example:

• Environmental grants may only fund projects that achieve specific environmental outcomes
• Energy efficiency programs may only fund specified upgrades, such as solar installations, battery storage, LED lighting or heating and cooling improvements
• Arts and cultural grants may only support defined events, themes or partnerships.
• Digital and innovation funding may only fund particular technologies rather than general system improvements

Local examples include:

• Community Energy Upgrades Fund supporting the installation of solar panels and batteries on public buildings and infrastructure
• NSW Office of Sport’s Female Friendly Community Sports Facilities and Lighting Upgrades Program enabling the replacement of older outdoor sports lighting with new energy-efficient systems
• NSW Environment Protection Authority Landfill Consolidation and Environmental Improvements Grants funding environmental and safety upgrades at the Temora landfill, including fencing, signage and CCTV.

Each of these grants was designed for a specific purpose and could not be used for other Council priorities.

The Reality of Competing for Grants

Grant funding is also highly competitive.

Councils invest significant time preparing applications, with no guarantee of success. For smaller councils in particular, this can place pressure on limited staff resources. Most grants require supporting information to evidence the readiness of the proposed project, such as strategic plans, approved designs, quotes, and letter of support. Preparing this material can take significant time and may also involve upfront costs.

Many grants also require Council to contribute its own funding. While this helps deliver important projects, it also means Council must carefully prioritise which grant opportunities it can realistically pursue.

Grant programs also come with fixed delivery timeframes. Once funding is awarded, projects often need to be completed within strict deadlines set by the funding body, meaning Council has limited flexibility over when the work is delivered, impacting the allocation of funds, equipment and staff time.

Why This Matters ?

Together, these changes mean grant funding plays a very different role in Council's finances than it did just a few years ago. While grants remain important for delivering specific projects, they are no longer available at the same scale and generally cannot be used to support day-to-day services or respond to broader budget pressures.

Many grant-funded projects also create ongoing maintenance, operational and renewal costs that become Council's responsibility once the project is complete. This means Council must carefully consider not only whether a grant can fund a project today, but whether it can sustainably support that asset into the future.

Understanding these changes helps explain one of the key factors behind Council's current financial position and why long-term financial sustainability cannot rely on grant funding alone.

Want to Support Stronger Funding for Local Communities?

The Invest in Us campaign, led by the Country Mayors Association of NSW and Local Government NSW, is advocating for 1% of GST revenue to be allocated to Australian councils as a fairer and more sustainable contribution.

If you would like to learn more about the campaign, visit The Country Mayors Association of NSW website.

If you would like to support the campaign, postcards are available from the Temora Shire Council Administration Building and Temora Shire Library for residents to send to their local Federal and State Members of Parliament.