Liverpool City Council estimates changes in the way Commonwealth funding is distributed by the NSW Government would leave it with less money to maintain roads, parks and community facilities.
The NSW Local Government Grants Commission is proposing to change the methodology of how it distributes Commonwealth Financial Assistance Grants (FA Grants) to local councils, and the Council says this will leave it worse off.
Mayor Ned Mannoun says the proposed change would leave Council with less money to look after more residents and provide the facilities its rapidly growing community needs.
"Liverpool is growing fast, and that means more roads to maintain, more parks and sporting fields to look after, and more demand for community facilities and services.
"Cutting our funding while our city is growing makes it harder to keep up. We need a fair system that recognises what it actually costs to look after our community.
"Liverpool Council is already facing growing costs as state and federal responsibilities are increasingly passed down to local government, and the proposed funding cuts would further reduce its capacity to absorb these costs while continuing to deliver essential services and facilities for residents."
Under the proposed changes, Liverpool's annual Financial Assistance Grant falls from $10.28 million to $8.47 million.
In a submission to the Grants Commission, Liverpool Council argues the proposed funding formula does not properly account for the costs of rapid population growth, social housing, ageing roads and the upkeep of new infrastructure.
The proposed roads funding cut is particularly concerning, with more than 40 kilometres of Council-managed roads already classified as being in very poor condition.
Liverpool is also dealing with growing traffic and freight movements linked to new housing developments, Western Sydney International Airport and the emerging Aerotropolis.
Mayor Mannoun said Liverpool provided roads, services and facilities for people from across South Western Sydney, not just those who lived in the area.
"Our roads, hospitals, schools, sporting facilities and public spaces serve people from right across the region. That puts extra pressure on local infrastructure, and Council has to manage those costs.
"We also have to maintain new parks, roads and facilities as our suburbs grow. Those costs don't disappear once the building work is finished."
Council wants the Commission to rethink the proposed formula, explain how the funding figures were calculated and give councils time to adjust if changes go ahead.
It also wants the overall pool of Commonwealth funding for councils increased before major cuts are made to individual councils.
Mayor Mannoun said Liverpool was not asking for special treatment.
"We're asking for a fair go. If the population grows and the demand for services increases, the funding needs to reflect that.
"Our job is to look after our residents and provide the roads, parks and facilities they rely on. We need a funding system that helps us do that, not one that makes it harder."
BACKGROUND
The NSW Local Government Grants Commission is proposing to change its methodology for distributing Commonwealth Financial Assistance Grants (FA Grants) to local councils.
Liverpool City Council says the proposed formula fails to properly take into consideration the costs of supporting a fast-growing community, maintaining ageing infrastructure and providing services to a major regional centre.
The key concerns are:
- Population growth: Liverpool's population reached an estimated 261,231 in June 2025, growing at 2.3 per cent annually, compared with 1.35 per cent across Greater Sydney. The formula does not adequately account for the cost of providing new infrastructure and services ahead of growth.
- Roads and traffic: The proposed formula would cut Liverpool's local roads funding by approximately $1.38 million a year, despite more than 40 kilometres of Council-managed roads being classified as in very poor condition. It fails to properly account for traffic volumes, heavy vehicles, road condition and growing freight movements.
- Social housing and rate-exempt properties: Liverpool has approximately 5,300 social housing dwellings owned by Homes NSW, plus around 550 managed by community housing providers. The formula does not adequately recognise the cost of providing services to communities where some properties do not generate council rates.
- Household capacity to pay: With 19.8 per cent of households earning less than $800 a week, Council argues that household income alone does not reflect its practical ability to raise revenue, particularly under NSW rate-pegging restrictions.
- Regional services: Liverpool provides health, education, employment, transport and community facilities serving people from across South Western Sydney. The formula does not fully recognise the costs of supporting people who live, work, study or access services in Liverpool without residing in the local government area.
- Growing infrastructure costs: New roads, drainage, parks, sporting fields and community facilities create ongoing maintenance and replacement costs. The formula does not adequately account for the long-term financial burden of these growing assets.
- Environmental obligations: Contaminated land, legacy industrial sites and other environmental issues create significant investigation, remediation and compliance costs that compete with funding for everyday services.
- Major Commonwealth infrastructure: Facilities including Holsworthy Military Barracks, the National Intermodal Corporation precinct and Western Sydney International Airport generate demands on local roads and supporting infrastructure that are not necessarily matched by council rates revenue.
- Restricted grants: The formula risks overstating revenue capacity if it does not distinguish between unrestricted income and grants tied to specific projects or services.
The financial impact on Liverpool
Under the proposed formula, Liverpool's annual Financial Assistance Grant would fall from $10.28 million to $8.47 million, a reduction of $1.81 million or 17.6 per cent.
Council is calling for the formula to be refined and tested, detailed council-level calculations to be published, and transitional arrangements to be considered before implementation. It also argues that increasing the overall Financial Assistance Grants pool should be prioritised before significant funding is redistributed between councils.
Financial Assistance Grants have declined from approximately 1 per cent of Commonwealth taxation revenue in 1996 to around 0.49 per cent in 2026–27.
