Commonwealth financial assistance grants to local government take the forms of general purpose grants, and grants for roads known as identified local road grants. The level of assistance has been declining as a proportion of gross domestic product because the formula used to calculate assistance does not provide growth in the real level of per capita assistance, although payments under the roads to recovery program have offset the decline to some extent.

The federal government has not adopted proposals to change financial assistance arrangements, and changes to the methods for distributing financial assistance among the states is unlikely because that would entail some states – and hence some local governments – losing funds and others gaining. The roads to recovery program is the government’s preferred method for increasing assistance to local government.