Garnaut Fitzgerald Review of Commonwealth-State Funding

CHAPTER 3: The Current System
National Competition Policy payments
The other significant component of general purpose grants is National Competition
Policy payments. These payments, which were introduced in the early 1990s, are
indexed to inflation and now total around $700 million per year. They are provided to the
States in return for implementation of competition policy reforms, and are allocated on
an equal per capita basis.
Special revenue assistance
The Australian Capital Territory receives $14 million in special assistance to
compensate it for circumstances in its relationship with the Commonwealth that do not
apply in other States (i.e. Canberra is the national capital). In the past, other jurisdictions
(principally the Northern Territory in recent times) have also received special assistance
for budget difficulties.
3.4 Specific purpose payments
Role of specific purpose payments
SPPs are grants from the Commonwealth to the States for specified services (such as
health, education, roads and the environment). They will comprise about $21 billion, or
40 per cent of total grants to State Governments in 2002–03.
SPPs are based on individual agreements between a State or States and the
Commonwealth Government. They are used by the Commonwealth for a variety of
reasons, including the pursuit of Commonwealth objectives in areas of State
constitutional responsibility, the achievement of national standards and payments for the
delivery of Commonwealth programs (see Chapter 5).
FINAL REPORT [44]