Australian Local Government Association

For information about ALGA's analysis of the 2005-06 Federal Budget please contact:

Larissa Karpish
Assistant Director, Ageing, Finance and Economic Policy
Phone: 02 6122 9427   
larissa.karpish@alga.asn.au

Fact sheet 10: Payments to the states

ALGA has compiled a detailed breakdown of all payments to the states and territories including direct payments to each state/territory local government as follows:

• Australian Capital Territory
• New South Wales
• Northern Territory
• Queensland
• South Australia
• Tasmania
• Victoria
• Western Australia

Australian Government funding to the states and territories is divided into three categories including:

• provision of revenue from the GST
• national competition policy payments: and
• specific purpose payments ('to' and 'through') the states

It is estimated that the states and territories will receive $ 37.3 billion in GST revenue in 2005-06. Currently, all the GST revenue collected by the Australian Government is distributed to the states and territories and is spent according to their own priorities. Distribution between the states and territories is on a horizontal fiscal equalisation basis.

The Australian Government will also provide the states residual adjustments and payments to compensate for GST revenue deferred as a result of allowing certain small businesses and non-profit organisations to pay GST on an annual basis. These payments (classified as 'other' in table 7.1) amount to $126.9 million.

As part of the implementation of the National Competition Policy agreement, the states and territories agreed to undertake reforms in return for additional funding (NCP payments). Total NCP Payments to the states and territories in 2005-06 amount to $799 million.

Specific Purpose Payments (SPPs) to the states and territories include funding for policy purposes that relate to a particular activity such health, education and aged care.

SPPs are classified into two categories: SPPs paid 'to' the states - payments direct to state governments; and SPPs 'through' the states - payments to the state governments to be passed on to local government, other bodies and individuals.

SPPs to the states and territories in 2005-06 will total $19.1 billion.

SPPs through the states and territories in 2005-06 will total $7 billion. The main payments in this category relate to non-government schools and local government financial assistance grants.

Tables 7.1 to 7.3 outline the estimated total payments to state and territory governments will receive in 2005-06.

Funding for major SPPs is included in each individual state and territory fact sheet.