Garnaut Fitzgerald Review of Commonwealth-State Funding

Chapter 5: Specific Purpose Payments and Overall Payments to the States
Table 5.5 shows trends in total grants from the Commonwealth to the States. Only New
South Wales and Victoria have consistently received less than a per capita share of total
grants, with the other States generally receiving above per capita shares. Western
Australia’s share of total grants has fallen from well above average to below average.
Queensland and the Australian Capital Territory have experienced a declining trend in
their shares of total grants, while the shares of total grants for New South Wales and
Victoria have increased.
TABLE 5.5: Relative per capita total payments, Australia = 100
NSW VIC QLD WA SA TAS ACT NT
1983–84 to 1987–88 86.2 83.9 100.6 116.2 118.6 145.3 167.8 462.2
1988–89 to 1992–93 86.9 86.3 102.9 110.0 116.9 140.3 153.7 428.4
1993–94 to 1997–98 89.1 88.8 101.5 104.7 118.6 141.1 111.5 401.9
1998–99 to 2002–03 91.1 88.1 101.6 96.8 117.7 151.0 118.3 402.0
Notes: Australian Capital Territory relativity prior to 1988-89 has been notionally set at the 1988-89 level.
Royalties are treated as State own source revenue
5.4 Features
SPP agreements range in value from $6 000 per year to $6.6 billion per year, from
programs that are administered by one person part-time to those employing over fifty
people full time, and from one-off grants to ten-year programs. However, they have a
number of common elements:
• funding is provided for a defined policy purpose
• the States are often subjected by the Commonwealth to input controls. They may be
required to provide matching funding (typically dollar for dollar), or a minimum level
of funding from their own sources (often as ‘maintenance of effort’ conditions, i.e.
requiring States to maintain their funding, typically in real terms)
• rules are prescribed for managing programs and approving projects
• States are required to report on performance to the Commonwealth
• agreements often specify criteria for access to services (e.g. the Australian Health
Care SPP requires States to provide free hospital services to anyone who wants
them).
SPP agreements usually last between one and five years, with larger SPPs generally
applying for longer periods. The Commonwealth also uses SPPs to provide funding to
States for special one-off purposes (e.g. the Sydney Olympics) or for particularly large or
important capital projects to which it is contributing (e.g. the Darwin to Alice Springs
railway).
SPP agreements are not legally binding, but are administrative and political agreements
that impose conditions on Commonwealth grants. However, recipients of SPP funding
are generally required to demonstrate, through various accountability and reporting
requirements (including performance indicators), that funds have been expended in
accordance with the terms and conditions of the SPP agreement.
FINAL REPORT [65]