Funding state and
local governments

State government funding

The Australian Government collects GST revenue on behalf of the States and Territories (the States), which the States then spend according to their own budget priorities, including on schools, hospitals, social services, public housing and transport infrastructure.

The Australian Government also provides specific purpose payments (SPPs) to be spent on particular programmes. SPPs for health, education and transport infrastructure constitute more than three-quarters of total SPPs.

In 2007‑08, the Australian Government will provide $28.5 billion in SPPs to the States — an increase of $2.3 billion from 2006‑07.

Since 1999-00, SPPs have increased by $12.9 billion, an increase of 72 per cent.

In the seven years since the reform of Commonwealth-State financial relations, total Australian Government payments to the States have averaged 6.8 per cent of GDP, compared with 6.2 per cent for the previous seven years.

Local government funding

The Australian Government will provide a total of $2.3 billion in payments to local governments in 2007-08. Of this, $1.7 billion will be provided in financial assistance grants. Local governments can spend this funding according to their own budget priorities.