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Part 3: Australia's Federal Relations (continued)

Payments for specific purposes

In 2013‑14, the Commonwealth provided payments to the States for specific purposes in areas administered by the States. These payments cover most functional areas of state and local government activity including: health; education; skills and workforce development; community services; housing; Indigenous affairs; infrastructure; and the environment.

The Commonwealth provided the following types of specific purpose payments to the States:

• National Specific Purpose Payments (National SPPs) in respect of key service delivery sectors;
• National Health Reform funding;
• Students First funding; and
• National Partnership payments — facilitation, project and reward payments.

National SPPs, National Health Reform and Students First funding

In 2013‑14, the Commonwealth continued to provide funding for key service delivery sectors though National SPPs, National Health Reform funding and Students First funding. The National SPPs are as follows:

• National Schools SPP (which was replaced by Students First funding from January 2014);
• National Skills and Workforce Development SPP;
• National Disability Services SPP; and
• National Affordable Housing SPP.

The States are required to spend each National SPP in the relevant sector.

The National SPPs are indexed each year by growth factors specified in the Intergovernmental Agreement.

Payments made throughout the year for National SPPs, National Health Reform and Students First are made in advance, based on Commonwealth estimates of the respective growth factors. A balancing adjustment is made after the end of the financial year (or calendar year, for Students First) once final growth factor data become available.

The National SPPs are distributed among the States in accordance with population shares based on the Australian Statistician's determination as at 31 December of that year. An equal per capita distribution was phased in over five years from 2009‑10.

In the case of the government schools component of the National Schools SPP (which ceased on 31 December 2013), the relevant population is each State's share of full‑time equivalent student enrolments in government schools.

From 1 January 2014, Students First funding replaced the National Schools SPP and various schools‑related National Partnership payments. Students First funding includes: funding for government and non‑government schools; capital funding and special circumstances funding for non‑government schools; and funding for non‑government representative bodies. Students First funding is distributed among the States in accordance with the Australian Education Act 2013 and relevant agreements made under that Act.

From 1 July 2012, the National Healthcare SPP was replaced by National Health Reform funding. Under the transitional arrangements in the National Health Reform Agreement, the Commonwealth's contribution for National Health Reform funding for 2012‑13 and 2013‑14 comprised amounts equivalent to those that would otherwise have been payable through the former National Healthcare SPP, and the SPP indexation arrangements continued to apply.

State shares of National Health Reform funding for 2013‑14 are allocated on a population basis, adjusted for cross border patient flows. The adjustment is calculated by the Administrator of the National Health Funding Pool reflecting State estimates of cross‑border activity. The Treasurer will determine the actual allocations for 2013‑14, following the Administrator's reconciliation of activity data.

National Partnership payments

Under the Intergovernmental Agreement, National Partnership payments to the States are the key vehicle to support the delivery of specified projects, facilitate reforms, or reward those jurisdictions that deliver on nationally significant reforms.

National Partnerships are typically time limited, reflecting the nature of the project or reform involved. National Partnership agreements are publicly available at: www.federalfinancialrelations.gov.au.

Total payments for specific purposes

In 2013‑14, the States received $45.6 billion in payments for specific purposes. Payments to the States for specific purposes constituted 11.0 per cent of total Commonwealth expenditure in 2013‑14.

Total payments for specific purposes, including National SPPs, National Health Reform funding, Students First funding and National Partnership payments, are shown in Table 26.

Table 26: Total payments for specific purposes by category, 2013‑14

$million	NSW	VIC	QLD	WA	SA	TAS	ACT	NT	Total
National Specific Purpose Payments(a)(b)	3,315	2,592	2,136	1,093	759	220	177	122	10,415
National Health Reform funding(a)(c)	4,352	3,463	2,800	1,515	1,006	299	272	135	13,841
Students First funding(d)	2,087	1,652	1,414	690	519	160	121	123	6,766
National Partnership Payments(e)	3,965	4,771	2,883	1,306	614	316	178	501	14,534
Total payments for specific purposes	13,720	12,478	9,233	4,603	2,898	995	748	881	45,557

(a) The 2013‑14 outcomes for the National SPPs and National Health Reform funding will be finalised following a Determination by the Treasurer.

(b) Includes National Schools SPP funding, which ceased in December 2013.

(c) State allocations of National Health Reform funding for 2013‑14 are published on a population basis, adjusted for cross‑border patient flows. These amounts will be finalised following reconciliation of activity data by the Administrator of the National Health Funding Pool.

(d) Students First funding commenced in January 2014. The 2013‑14 outcomes for Students First funding will be finalised following a Determination by the Minister for Education.

(e) Includes financial assistance grants for local government.

Total payments for specific purposes by sector, including National SPPs, National Health Reform funding, Students First funding and National Partnership payments, are shown in Table 27.

Table  27: Total payments for specific purposes by sector, 2013‑14

$million	NSW	VIC	QLD	WA	SA	TAS	ACT	NT	Total
Health	4,989	3,940	3,179	1,736	1,158	377	305	191	15,875
Education	4,319	3,483	2,926	1,458	1,091	325	247	285	14,135
Skills and Workforce Development	560	437	347	189	129	39	29	19	1,750
Community Services	542	803	327	334	104	31	31	101	2,273
Affordable Housing	522	346	462	353	136	34	28	162	2,043
Infrastructure	2,182	2,947	1,105	354	88	77	65	92	6,910
Environment	100	198	54	11	75	37	3	6	485
Contingent	58	5	310	2	..	..	-	1	377
Other(a)	448	319	523	165	116	74	39	23	1,708
Total payments for specific purposes	13,720	12,478	9,233	4,603	2,898	995	748	881	45,557

(a) Includes financial assistance grants for local government.

Total payments for specific purposes by sector and category, including National SPPs, National Health Reform funding, Students First funding and National Partnership payments, are shown in Table 28.

Table 28: Total payments for specific purposes by sector and category, 2013‑14

$million	NSW	VIC	QLD	WA	SA	TAS	ACT	NT	Total
Health
National Health Reform funding(a)(b)	4,352	3,463	2,800	1,515	1,006	299	272	135	13,841
National Partnerships	637	477	379	222	152	78	33	56	2,034
Total health payments	4,989	3,940	3,179	1,736	1,158	377	305	191	15,875
Education
National Schools SPP(a)(c)	2,024	1,600	1,330	657	488	138	109	75	6,422
Students First funding(d)	2,087	1,652	1,414	690	519	160	121	123	6,766
National Partnerships	208	231	182	112	84	27	18	87	947
Total education payments	4,319	3,483	2,926	1,458	1,091	325	247	285	14,135
Skills and workforce development
National Skills and Workforce Development SPP(a)	455	350	281	151	102	31	23	15	1,409
National Partnerships	105	88	66	38	27	8	6	4	341
Total skills and workforce development payments	560	437	347	189	129	39	29	19	1,750
Community services
National Disability SPP(a)(e)	427	331	268	146	75	20	22	12	1,302
National Partnerships	115	472	59	188	30	10	9	88	971
Total community services payments	542	803	327	334	104	31	31	101	2,273
Affordable housing
National Affordable Housing SPP(a)	410	312	256	139	94	30	22	20	1,283
National Partnerships	112	35	205	215	42	4	5	142	760
Total affordable housing payments	522	346	462	353	136	34	28	162	2,043
Infrastructure
National Partnerships	2,182	2,947	1,105	354	88	77	65	92	6,910
Environment
National Partnerships	100	198	54	11	75	37	3	6	485
Contingent payments
National Partnerships	58	5	310	2	..	..	-	1	377
Other
National Partnerships(f)	448	319	523	165	116	74	39	23	1,708
Total payments for specific purposes	13,720	12,478	9,233	4,603	2,898	995	748	881	45,557

(a) The 2013‑14 outcomes for the National SPPs and National Health Reform funding will be finalised following a Determination by the Treasurer.

(b) State allocations of National Health Reform funding for 2013‑14 are published on a population basis, adjusted for cross‑border patient flows. These amounts will be finalised following reconciliation of activity data by the Administrator of the National Health Funding Pool.

(c) National Schools SPP funding ceased in December 2013.

(d) Students First funding commenced in January 2014. The 2013‑14 outcomes for Students First funding will be finalised following a Determination by the Minister for Education.

(e) Includes adjustment to achieve budget neutrality for 2012‑13 activity (see footnote to Attachment A for details).

(f) Includes financial assistance grants for local government.

Natural Disaster Relief and Recovery Arrangements

The Commonwealth provides funding under the Natural Disaster Relief and Recovery Arrangements (NDRRA) to assist the States with relief and recovery assistance following eligible natural disasters.

For accounting purposes, the Commonwealth recognises a liability equal to the present value of future payments expected to be made to the States under the NDRRA. This is regardless of whether a State has completed eligible disaster reconstruction work or submitted an eligible claim under the NDRRA. Total cash payments in 2013‑14 are presented in Table 29 below; see Table 44 in Attachment A for the expense outcome.

Table  29: NDRRA cash payments, 2013‑14

$'000	NSW	VIC	QLD	WA	SA	TAS	ACT	NT	Total
NDRRA	482,757	626	1,514,545	53,226	-	13,773	-	-	2,064,927
Total	482,757	626	1,514,545	53,226	-	13,773	-	-	2,064,927

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