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Part 2: Payments for specific purposes

Overview

The Commonwealth provides payments to the States for specific purposes in policy areas for which the States have primary responsibility. 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 currently supports the States in certain service delivery sectors through three National Specific Purpose Payments (National SPPs) — Skills and Workforce Development, Disability Services and Affordable Housing. The States are required to spend each National SPP in the relevant sector.

The National SPPs are ongoing and are indexed each year by growth factors specified in the Intergovernmental Agreement on Federal Financial Relations (the Intergovernmental Agreement). They are distributed among the States in accordance with population shares based on the Australian Statistician's determination as at 31 December of the relevant year.

The Commonwealth also supports the States through the provision of public hospitals funding. This funding is currently calculated by reference to the level of estimated efficient growth in hospital activity in each State. At the 1 April 2016 Council of Australian Governments (COAG) meeting, the Commonwealth and the States signed a three year Heads of Agreement for public hospitals ahead of consideration of longer‑term funding arrangements. The Commonwealth will provide an estimated additional $2.9 billion over three years for public hospital services with growth capped at 6.5 per cent per year. Further details are included in the Health section of this Part.

Between 2018 and 2020, the Commonwealth will also provide $1.2 billion in additional funding for government and non‑government schools. Funding, which will grow by 3.56 per cent and enrolments each year, will be contingent on reform efforts by the States and non‑government schools sector to improve education outcomes.

These funding arrangements for schools and hospitals provide an opportunity to develop longer‑term funding arrangements and further reforms that focus on quality and sustainability into the future.

Under the Intergovernmental Agreement, National Partnership payments to the States are the key vehicle to facilitate reforms or support the delivery of projects and services. National Partnerships are typically entered into for a fixed period of time, reflecting the nature of the project or reform involved.

To the fullest extent possible, payments are aligned with the achievement of milestones and are made after the States have achieved the outcomes or outputs specified in the relevant National Partnership.

National Partnerships are publicly available on the Federal Financial Relations website.

Total payments for specific purposes

Total payments for specific purposes by category are shown in Table 2.1.

Table 2.1: Total payments for specific purposes by category, 2015‑16 to 2019‑20
$million NSW VIC QLD WA SA TAS ACT NT Total(a)
2015‑16                  
National Specific Purpose Payments 1,353 1,056 847 460 300 91 69 43 4,220
National Health Reform funding 5,552 4,175 3,525 1,822 1,224 375 325 199 17,196
Students First funding 4,809 3,915 3,301 1,561 1,129 368 265 284 15,636
National Partnership payments(b) 3,478 2,107 2,476 1,726 661 276 106 724 12,908
Total payments for specific purposes 15,192 11,253 10,150 5,569 3,315 1,111 765 1,250 49,958
2016‑17                  
National Specific Purpose Payments 1,379 1,080 864 471 305 92 71 44 4,306
National Health Reform funding 5,717 4,373 3,630 2,012 1,268 365 341 206 17,912
Students First funding 5,242 4,240 3,651 1,673 1,194 397 280 319 16,996
National Partnership payments(b) 4,897 2,068 3,346 1,763 1,158 379 182 623 16,068
Total payments for specific purposes 17,235 11,760 11,491 5,918 3,925 1,233 874 1,191 55,280
2017‑18                  
National Specific Purpose Payments 1,410 1,107 883 484 310 93 47 44 4,377
National Health Reform funding 6,022 4,596 3,853 2,155 1,326 378 365 229 18,923
Students First funding 5,552 4,469 3,833 1,857 1,265 410 294 316 17,997
National Partnership payments(b) 4,130 1,910 3,491 1,836 1,294 256 142 465 14,727
Total payments for specific purposes 17,114 12,081 12,060 6,332 4,195 1,136 848 1,055 56,025
2018-19                  
National Specific Purpose Payments 930 1,135 903 497 203 94 47 45 3,855
National Health Reform funding 6,340 4,829 4,089 2,307 1,387 390 392 253 19,987
Students First funding 5,747 4,690 3,971 2,050 1,337 417 313 308 18,833
National Partnership payments(b) 3,464 2,228 3,057 1,644 1,011 325 114 225 12,616
Total payments for specific purposes 16,482 12,883 12,019 6,498 3,937 1,225 866 830 55,291
2019-20                  
National Specific Purpose Payments 945 746 591 513 205 60 48 29 3,138
National Health Reform funding 6,674 5,074 4,337 2,470 1,449 403 420 278 21,106
Students First funding 5,996 4,933 4,209 2,157 1,395 430 331 325 19,777
National Partnership payments(b) 2,378 1,570 2,249 1,095 575 207 120 218 8,959
Total payments for specific purposes 15,993 12,322 11,386 6,235 3,624 1,101 919 851 52,981

(a) As State allocations for a small number of programmes have yet to be determined, these payments are not included in State totals. As a result, total payments may not equal the sum of State totals.

(b) Includes financial assistance grants for local government and payments direct to local government.

Total payments for specific purposes by sector are shown in Table 2.2.

Table 2.2: Total payments for specific purposes by sector, 2015‑16 to 2019‑20
$million 2015‑16 2016‑17 2017‑18 2018-19 2019-20
Health 17,906 18,723 19,552 20,598 21,712
Education 16,260 17,574 18,429 18,873 19,817
Skills and workforce development 1,852 1,992 1,499 1,522 1,548
Community services 2,981 2,558 2,854 4,885 1,530
Affordable housing 1,883 1,936 1,759 1,387 1,409
Infrastructure 6,999 9,178 8,754 5,046 3,956
Environment 590 692 491 228 150
Contingent 49 28 11 .. ..
Other(a) 1,438 2,601 2,676 2,752 2,859
Total payments for specific purposes 49,958 55,280 56,025 55,291 52,981

(a) Includes financial assistance grants for local government.

Total payments for specific purposes by sector and category are shown in Table 2.3.

Table 2.3: Total payments for specific purposes by sector and category, 2015‑16 to 2019‑20
$million 2015‑16 2016‑17 2017‑18 2018-19 2019-20
Health          
National Health Reform funding 17,196 17,912 18,923 19,987 21,106
National Partnerships 710 811 629 611 606
Total health payments 17,906 18,723 19,552 20,598 21,712
Education          
Students First funding 15,636 16,996 17,997 18,833 19,777
National Partnerships 624 578 432 40 40
Total education payments 16,260 17,574 18,429 18,873 19,817
Skills and workforce development          
National Skills and Workforce Development SPP 1,455 1,476 1,499 1,522 1,548
National Partnerships 397 516 - - -
Total skills and workforce development payments 1,852 1,992 1,499 1,522 1,548
Community services          
National Disability SPP 1,440 1,487 1,516 949 185
National Partnerships 1,541 1,071 1,338 3,936 1,344
Total community services payments 2,981 2,558 2,854 4,885 1,530
Affordable housing          
National Affordable Housing SPP 1,324 1,343 1,363 1,383 1,405
National Partnerships 559 593 397 4 4
Total affordable housing payments 1,883 1,936 1,759 1,387 1,409
Infrastructure          
National Partnerships 6,999 9,178 8,754 5,046 3,956
Environment          
National Partnerships 590 692 491 228 150
Contingent payments          
National Partnerships 49 28 11 .. ..
Other          
National Partnerships(a) 1,438 2,601 2,676 2,752 2,859
Total payments for specific purposes 49,958 55,280 56,025 55,291 52,981

(a) Includes financial assistance grants for local government.

Further information on each of these payments is contained in this Part. New measures associated with payments to the States are included in Budget Paper No. 2, Budget Measures 2016‑17.

Total payments to the States for specific purposes, as categorised by Government Finance Statistics functions, are set out in Appendix B, which is available online.