Fact sheet 10: Payments to the states
Australian Government funding to the states and territories is divided into three categories including:
- provision of revenue from the GST
- national competition policy payments
- specific purpose payments ('to' and 'through') the states
It is estimated that the states and territories will receive $ 39.1 billion in GST revenue in 2006-07. 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 $17.2 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). The 2005-06 payments totalling $820.4 million were the last payments under the current NCP arrangements. COAG agreed to a new reform agenda in 2006 and new payment arrangements (based on achieving agreed actions) are to be finalised.
Specific Purpose Payments (SPPs) to the states and territories includes 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 2006-07 will total $20.5 billion.
SPPs through the states and territories in 2006-07 will total $7.4 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 2006-07.
| General revenue assistance | NSW $m | VIC $m | QLD $m | WA $m | SA $m | TAS $m | ACT $m | NT $m | Total $m |
|---|---|---|---|---|---|---|---|---|---|
| Total General Revenue Assistance | 10946.4 | 8469.2 | 7972.4 | 3923.5 | 3545.0 | 1557.3 | 758.3 | 1975.1 | 39130.1 |
| Provision of GST Revenue to the states | 10941.4 | 8465.4 | 7968.9 | 3921.8 | 3543.5 | 1556.7 | 758.0 | 1974.4 | 39130.1 |
| National Competition Policy Payments | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Other | 5.0 | 3.8 | 3.5 | 1.7 | 1.5 | 0.6 | 0.3 | 0.7 | 17.1 |
| Specific purpose payments | NSW $m | VIC $m | QLD $m | WA $m | SA $m | TAS $m | ACT $m | NT $m | Total $m |
|---|---|---|---|---|---|---|---|---|---|
| Total Specific Purpose Payments | 8966.1 | 6424.5 | 5319.5 | 3423.2 | 2162.9 | 675.3 | 436.1 | 418.3 | 27825.9 |
| Specific Purpose Payments to the States | 6591.6 | 4578.2 | 3897.8 | 2675.6 | 1586.0 | 503.2 | 288.0 | 342.5 | 20462.9 |
| Specific Purpose Payments through the States | 2374.5 | 1846.3 | 1421.7 | 747.6 | 576.9 | 172.1 | 148.1 | 75.8 | 7363.0 |
| Revenue assistance | NSW $m | VIC $m | QLD $m | WA $m | SA $m | TAS $m | ACT $m | NT $m | Total $m |
|---|---|---|---|---|---|---|---|---|---|
| Total Payments | 19912.5 | 14893.7 | 13291.9 | 7346.7 | 5707.9 | 2232.6 | 1194.4 | 2393.4 | 66973.1 |
| General Revenue Assistance | 10946.4 | 8469.2 | 7972.4 | 3923.5 | 3545 | 1557.3 | 758.3 | 1975.1 | 39147.2 |
| Specific Purpose Payments | 8966.1 | 6424.5 | 5319.5 | 3423.2 | 2162.9 | 675.3 | 436.1 | 418.3 | 27825.9 |
For information about ALGA's analysis of the Federal Budget please contact:
- John Pritchard
- Executive Director, Policy and Research
Australian Local Government Association - Phone: 02 6122 9414
- john.pritchard@alga.asn.au