Specific Purpose Payments
A Fair Share of Specific Purpose Payments (SPPs)
Specific Purpose Payments are payments made by the Australian Government to state, territory or local governments that are not general purpose (i.e. untied) funding. SPPs are payments for policy purposes relating to particular functionalal activities, are usually subject to conditions on expenditure, and are predominately the responsibility of state, territory and local governments.
The Australian Government uses SPPs for a variety of reasons including:
- implementing national priorities in areas of state and territory responsibility (e.g. Gun Buyback Scheme, national highway system, breast cancer screening)
- Establishing a national standard or scheme and assisting with implementation costs (e.g. Australian Bone Marrow Donor Registry, target programs in schools)
- complying with international obligations (such as management of world heritage properties)
- compensation for policies in areas of Australian Government responsibilities that are detrimental to the states, including payments in lieu of royalties and liberalising access to the Commonwealth Pensioner Concession Card
Advantages of additional SPPs to local government include:
- additional funding can be paid direct to local government
- the Australian and local governments working together can determine program priorities and delivery
- local government can market itself as a service deliverer at the local level
- addressing cost shifting between the Australian and local governments
Disadvantages of SPPs include:
- significant uncertainty surrounding growth and/or continuity, since SPPs are at the discretion of the Australian Government
- increased costs incurred by all levels of government in administrative functions associated with SPPs (eg negotiation of arrangements)
- timing problems for SPPs that require funding to be matched by the states
Whilst local government will continue to argue for an increase in Financial Assistance Grants (FAGs) to 1% of Commonwealth taxation revenue, in the short term, local government may also need to argue for a Fair Share of SPPs as a means of creating a robust delivery platform for services.
Given that SPPs are payments tied to certain objectives, a fundamental question to be addressed is the extent to which local government needs to be involved in the delivery of particular services. Local government must also be aware of the role of the private sector in service provision and cognisant of the Commonwealth government's policies in relation to ensuring a mix of providers.
There are significant opportunities in the provision of specific services. Based on the above principles, local government is most likely to have a competitive advantage in the following service delivery areas on behalf of other levels of government:
- home maintenance and home care services
- public health such as immunisation
- sport, recreation and leisure pursuits
- child care (to the extent that it encourages parents to return to work)
- local roads and their link with roads of regional strategic importance
- public transport and traffic congestion management to remove transport inefficiencies
- environmental services
- regulatory activity including monitoring and enforcement, and public administration
It should be noted that local government needs to be cautious about accepting funding and developing service delivery programs, particularly those that require recurrent funding under SPPs. Programs funded through SPPs are under constant budgetary review by the Commonwealth and are therefore subject to variation after the expiration of the SPP agreement.
