Article by Penny Farnsworth, Senior Advisor, Grant Office & Professional Advisory
The Federal Budget – what it means for your current and future grants and funding programs
By now, you will likely have read or heard extensive coverage of the Federal Budget, including the analysis from the Local Government Association of Queensland (LGAQ) which welcomes the Government's decision to bring forward of 80% of the Financial Assistance Grant, the $2 billion funding for critical housing infrastructure and new rounds of community infrastructure funding.
The LGAQ continues to advocate for councils in relation to key issues such as the level of Financial Assistance Grants, the need to continue the Local Roads and Community Infrastructure Program and the need to address chronic overcrowding in First Nations housing.
From a Grant Office perspective, we have analysed the Budget to see what it might mean for current and future grants and funding programs for councils and communities. We are starting to map funding strategies for 2026-2027 and how we can best align and mature council priorities with available funding opportunities.
Budget context
The "most important and ambitious Budget in decades" contained few surprises, with most of the big ticket announcements such as changes to negative gearing, capital gains tax (CGT) and discretionary trusts, a personal ‘tax offset’ and major savings in the NDIS announced, strategically placed or heavily tipped by well-informed sources in the weeks leading up to Budget night.
The Budget was shaped around five themes addressing:
- The global oil shock and building resilience
- Cost of living pressures
- Improving productivity
- Reforming the tax system
- Budgetary savings designed to both increase sustainability and reduce the pressure on inflation.
For councils and regional communities, the announcements within these themes contain mixed news.
On the positive front, the Government announced a number of new programs including:
- The long speculated and now confirmed $2 billion investment in enabling infrastructure to support housing development through the Local Infrastructure Fund (part of the Housing Support Program). The budget papers indicate the funding will be provided to "local governments and state utility providers" with $500 million reserved for regional Australia. At first glance, the Fund looks very similar to Queensland’s Residential Activation Fund and will certainly help unlock housing supply in the regions – although $500 million across all regions does not go far. The first funding round will open later this year, with a second round to follow in 2027.
- Access to the Local Infrastructure Fund will be linked to "further state-based reforms to improve productivity in the housing sector" – including faster and simpler approvals, making more land available and delivering a national construction code. Environmental approvals will also be streamlined, with $65.5 million in funding over four years for bilateral agreements with states and territories to "cut red tape and duplication" while maintaining "strong environmental safeguards".
Continuing programs
Programs set to continue or which have increased funding include the:
- Active Transport Fund will receive $500 million funding over ten years from 2026-27 (and $50.0 million per year ongoing) to continue to support the construction and upgrade of bicycle and walking paths across Australia.
- Growing Regions and Thriving Suburbs programs will receive $781.6 million over four years from 2026–27 for further rounds to deliver place-based community infrastructure projects in urban and regional Australia.
- Stronger Communities Programme will receive $30.1 million over three years from 2026–27 for round ten to support small capital projects that deliver social benefits for local communities across Australia.
- Roads to Recovery Program will receive $843 million in 2026-27, Black Spot Program which gets $157.4 million per year for four years and the Safer Local Roads and Infrastructure Program will receive $1.02 billion over four years from 2026-27.
- Regional Precincts and Partnerships Program has funded 48 projects to date valued at $253 million from the original $400 million allocation (2023–24 to 2026–27). While this suggests funding remains within the original program envelope, published 2026-27 allocations appear relatively limited and may primarily relate to milestone payments for existing commitments. The extent of genuinely available future competitive funding remains unclear.
- Major and Local Community Infrastructure Program includes $570 million over four years from 2025–26, primarily tied to existing election commitments and pre-identified projects rather than a currently open competitive funding stream.
- Remote Jobs and Economic Development Program will receive an extra $299 million over five years from 2025–26 (and $161.7 million per year ongoing) to create an additional 3,000 jobs.
- Remote Airstrips Upgrade Program, which will enter its final year of funding in 2026-27 having received an additional $50 million over three years in 2024-25.
- Remote Air Services Subsidy Scheme will receive an extra $1.7 million in 2026-27 to subsidise the carriage of passengers and essential goods to communities in remote and isolated areas.
- Protecting and Restoring the Great Barrier Reef program will continue with $86.8 million over two years from 2026-27.
- Protecting Australia’s Native Species program will receive continuing funding of $110.8 million over two years to extend the Saving Native Species Program and H5 bird flu preparedness.
- Electric Vehicle Charging Infrastructure Program will receive $40 million over four years to accelerate the roll out of fast kerbside charging infrastructure.
- First Nations and World Heritage Protection programs will receive $2.2 million to empower local communities to assess priorities for protection.
- NBN upgrades, with the final stage to deliver upgrades to around 340,000 premises in regional Australia, this largely reflects continuation of previously announced funding commitments rather than a significant new 2026–27 Budget measure.
Disaster funding
Importantly, the Budget contained a commitment to continue to support communities impacted by disasters, with funding for natural disaster relief expected to increase by $2.5 billion. This includes:
- $6 million in 2026–27 to the National Emergency Management Agency (NEMA) to continue engagement with the states and territories on a national high‑speed and high‑capacity mobile broadband emergency response capability
- Funding to implement the new national cell broadcast messaging system to improve emergency warning communications
- Funding to bolster the national aerial firefighting fleet and increase national surge capability during the higher–risk weather season.
The Government has already provided some funding, with the remaining cost of the measures to be partially met from savings in NEMA, with the Disaster Ready Fund to partially meet the cost of the national cell broadcasting messaging system and the national aerial firefighting fleet.
On the insurance front, the Government is providing $3.4 million over four years from 2026–27 to "support and develop measures that place downward pressure on property insurance costs and reduce unintentional underinsurance", including $2.4 million over two years from 2026–27 for Treasury to develop and consult on options to improve clarity around the basis of home and contents premiums, and to legislate standard definitions of natural hazard terms used in property insurance contracts.
In relation to programs to support First Nations communities, the Budget provides an extra $6.8 million in 2026–27 to continue arrangements for First Nations people to own, access and manage water and additional funding for First Nations led health care, remote grocery stores, housing advocacy, education and training.
For aged care, funding for the Support at Home program will be increased by $1 billion over four years to ensure ‘personal care’ is fully funded, with additional funding also provided for capital subsidies for residential aged care providers to increase bed supply and equity of access.
Funding is also allocated to support states and territories to implement bioregional plans and strategic assessments in priority areas.
While not direct competitive grant opportunities for most councils, the following measures may influence regional infrastructure delivery, freight resilience, and environmental investment opportunities:
- A national fuel security package including temporary halving of the fuel excise, reduction of the heavy vehicle road user charge to zero for three months, establishment of the Australian Fuel Security Reserve, and interest-free loans through the National Reconstruction Fund’s Economic Resilience Program.
- Funding of $1.8 billion over three years for the Australian Rail Track Corporation’s Network Investment Program, alongside $812.5 million for the Bruce Highway – Gateway Motorway to Dohles Rocks Road (Stage 2) upgrade in Queensland.
- Funding of $36.9 million over two years from 2026–27 to support the Nature Repair Market and environmental offset supply, creating potential opportunities for biodiversity and land restoration projects.
Savings and programs ending
As flagged by LGAQ, the Budget did not provide funding to continue the Local Roads and Community Infrastructure Program.
Savings across portfolios were announced, with varying detail, including:
- $164.4 million over three years from 2026–27 by reducing uncommitted funding under the Powering the Regions Fund
- $111.5 million over six years from 2025–26 by redirecting uncommitted grant funding in the Climate Change, Energy, the Environment and Water portfolio
- $103.9 million over seven years from 2028–29 by returning uncommitted funding from the National Water Grid Fund
- $93.8 million over two years from 2025–26 from reducing expected uncommitted funding under the Powering the Regions Fund
- $78.6 million over four years from 2025–26 from reprioritising uncontracted funding under the Regional Hydrogen Hubs program
- $266.2 million over four years from 2026–27 (and $106.3 million per year ongoing) through reforms to the Australian Apprenticeships Incentive System, redirecting employer incentives to small and medium employers and Group Training Organisations
- $25.3 million over four years from 2025–26 by returning uncommitted funding for states and territories from National Skills Agreement policy initiatives
- $6.4 million in 2025–26 by returning uncommitted funding from employment and workplace relations grant programs
- $266.2 million over five years from 2025–26 (and an additional $1.9 billion from 2030–31 to 2042–43) by redirecting uncommitted grant funding in the Industry, Science and Resources portfolio.
These grant programs all impact on regional areas and councils and while most were unallocated, the opportunities they presented will be missed. Fortunately, in some cases the funds are being redirected to other priorities.
As previously announced, there are significant savings to the NDIS program. The Government has ‘provisioned’ funding of $3 billion over five years to establish Foundational Supports outside the NDIS, to be matched by states and territories. This is in addition to the $4 billion Thriving Kids Program. The Regional Ministerial Budget Statement emphasises that the Thriving Kids investment will include $1.4 billion for states and territories to deliver Thriving Kids services. It also states that the Government will contribute up to $139.7 million to facilitate state-delivered Thriving Kids services in early childhood education and care services.
At this stage, it is not clear what these changes will mean for service delivery in regional and remote communities, or for council funded and supported programs, with the potential for both opportunities and challenges ahead.
Going forward
The Budget provided a range of opportunities through new funding programs which will be of interest to many councils and communities, including the critical housing infrastructure program.
The bringing forward of the Financial Assistance Grant will provide some relief in the short term, but it falls short of LGAQ’s and councils' call for a permanent increase.
Importantly, amongst all the speculation of funding cuts and savings, a number of critical programs such as the Regional Precincts and Partnerships Program, Active Transport Fund, Growing Regions and Thriving Suburbs programs, Stronger Communities Programme, Roads to Recovery Program and Black Spot Program are set to continue. Unfortunately, the much-loved LRCIP will not continue and savings are flagged in important programs such as the National Water Grid and the Powering the Regions Fund. Several savings measures are not detailed, making it hard to assess the impact on councils and communities. The Grant Office continues to efficiently mature councils' priority projects in line with forecasted funding opportunities.
In the Budget papers the Government has flagged the re-established House of Representatives Standing Committee on Regional Development, Infrastructure and Transport inquiry into local government funding and fiscal sustainability, indicating it ‘looks forward to the final recommendations from the Committee’. This provides another important forum to address issues relating to funding mechanisms and grant programs, and the need for certainty into the future.
In a tight fiscal environment and with the continued global uncertainty, it is more critical than ever that councils have projects as ‘grant ready’ or 'shovel ready' as possible, with detailed costings (including whole of life), designs, timeframes, clear statements of need (reflected in council plans and strategies), options analysis and cost benefits analysis or business cases where relevant. With high fuel and construction and transport costs likely to continue for some time, councils will need to plan for and manage contingencies, particularly for projects costed and funded prior to the current situation in the Middle East.
The Queensland State Budget in June will also be framed in the context of the current global situation and will likely bring both challenges and opportunities.
The Grant Office is pleased to see so many key programs continuing and look forward to supporting councils by progressing priority projects to 'grant ready' status, aligning project maturity with forecast funding opportunities, and monitoring potential funding gaps to help inform future funding strategies in the coming financial year.