Mr Walsh said the government “skimmed” nine per cent off Federal Black Spot Program funding for a project under the pretence of internal department costs.
The Black Spot Program allocates $110 million of federal money annually to state governments to improve dangerous areas of road, according to the Australian Local Government Association.
The government, however, rejected accusations it had simply pocketed the money.
A spokesperson said the program, which includes funding for council and state roads, incurred administration costs that were acquired when councils nominated to use the program.
“State governments manage and administer the Federal Black Spot Program on behalf of the Commonwealth Government,” the spokesperson said.
Administration costs are incurred, for example, when providing expert advice to support councils with projects, during the application process and when assessing a project’s suitability for funding, the spokesperson said.
Costs also come from the preparation and management of contracts with councils to enable the transfer of the federal funding from state to local government.
Federal Black Spot Program guidelines state that a portion of the funding may be used towards costs related directly to administration of the program.
Mr Walsh said a parliamentary inquiry into local government heard that administration costs incurred from a Black Spot project Mansfield Shire Council had nominated exceeded the cost of managing the project.
“That nine per cent was essentially the project management costs. It was a surprise and not a welcome one,” council chief executive Kirsten Alexander said, per Mr Walsh.
“This was money meant to improve road safety across the state and instead, nearly a tenth of it was kept by the Labor Government to cover costs of its bureaucrats,” Mr Walsh said.
Nine per cent of funding for the project in Mansfield Shire equated to $176,000, Mr Walsh said.
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