Posted by MTV News on Tuesday, February 13, 2021 07:16:20A key question facing the Federal Government is whether it will invest more than $4 billion in the States to help them tackle their own severe housing crisis.
But, with the state and territory governments having been largely cut off from the stimulus, the question of whether it can afford to spend so much more is far from clear.
The latest Budget shows that the Federal government will get just $1.9 billion of the $5.7 billion it has promised to the States, and a further $5 billion of that will be used to help pay for the state infrastructure and social services.
While this is a far cry from the $9 billion the Federal Treasurer, Joe Hockey, announced in March that he would be providing to the states, it is an increase from $4.9bn the Federal Reserve Board forecast in February, and will leave the States on track to receive $7.4 billion.
The $1 billion is an all-time low and comes despite the Government’s insistence that it will spend at least $4bn.
But it comes with a warning from the Government that, with no certainty on the future of the Government debt ceiling, it will not take more than the $4,000 that it is currently expected to spend on the States.
“The Federal Government has consistently under-estimated the extent of the challenge it faces, and it will continue to do so as it considers the extent to which additional federal assistance is needed,” the Government said.
It also warned that, despite the Federal Governments $4billion commitment to the State Governments, the State Government will have to wait for at least a year before the funds are available.
“The Government will not provide any assistance until it is certain that the State and Territory Governments will be able to pay their debt to the Federal Treasury, and that this payment will be timely, on-time and in full,” the Federal State Government said in a statement.
The Federal Treasurer also revealed that he had put a request to the state governments for $2.2 billion to provide a temporary bridge to the floodplain and for flood defences.
A $1bn bridge is a temporary measure that would be extended until the State governments are able to come up with the necessary cash.
The Government has also announced a $1 million grant to assist the States and Territories to buy flood defences, and another $200 million for flood prevention.
“These actions will allow the States an additional $1 in funding for their flood defences and to purchase flood defences in the event of a future flood,” the Treasurer said.
“But in the meantime, the Government has provided a $200,000 grant to support flood mitigation measures and $200m for flood mitigation across the country.”
With no certainty of how the Federal aid will be spent, the States may struggle to get the Federal money they need.
“This Government will make no promises on how the Government will spend the additional funds,” the State Treasurer said in his Budget speech.
“In fact, the Governor-General has already committed that the Government intends to spend the Federal funds it receives from the States.”
But with $4 million being allocated for the States as well as $4 for the Federal, the Federal is expected to have about $3.5 billion to spend.
What you need to know about the state funding crisis:What the state funds crisis means for Sydney:What is the state money crisis?
In the face of the state spending crisis, the NSW Government announced that it would be extending its current financial support to the cities of Newcastle, Penrith and Wentworth from October, as well.
The Federal and State governments agreed to extend this until March 2019, meaning that the states will receive $2,300 per day of state funding from the Federal.
This is a massive increase from the amount of $1,800 per day, but it is a significant reduction compared to what they were expecting to receive.
Despite the increase, it remains unclear how much more funding will be forthcoming.
What will the state get from the federal funds?
The Federal is expecting to get about $1 to $1 per month for every $1 of the total $5,735,000 in funding.
In an attempt to reduce the gap between the state government and the Federal over the money it is receiving, the states are expected to receive about $5 per month more per year.
However, this could be less than what the Federal has been asking for, as the states have already been cut off completely from the assistance provided by the Federal in the form of the infrastructure, social services and pensions.
When it comes to the $1billion that will have been allocated to the four States, the Coalition has been adamant that it needs to give the States more money, and is also prepared to provide them with the extra $1 a day they have been promised.
But the states