Austroads works with local government to improve Australia's roads and transport systems, recognising the value and importance of developing the local road component of the national road network. Local government is a member of Austroads through the Australian Local Government Association. In addition there is an agreement between Austroads, the Australian Local Government Association (ALGA) and the Institute of Public Works Engineering Australia (IPWEA).

The agreement recognises that local roads comprise around 85 percent of the Australian road network and are important for social and economic development within communities. The agreement seeks to improve communication between the three organisations and their constituents, and helps ensure the management of local roads and the resolution of strategic local road issues are facilitated with the benefit of knowledge, technology, best practice and research outputs from Austroads' activities.