Commonwealth-State Financial Relations
States are heavily reliant upon Commonwealth grants to fund State services. The reliance on Commonwealth grants is high by international standards, diminishing the accountability of both levels of government.
GST revenue grant are the largest single source of Commonwealth funding.
The allocation of GST revenue grants between the States is determined by the Commonwealth Grants Commission. The Commission takes into account States’ relative costs of providing services and relative capacity to raise revenues. There has been a long-term decline in Western Australia's grant share reflecting the strong growth in the State's royalty revenues.
The Commonwealth provides many grants for specific purposes, such as education and health. Under the 2009 Intergovernmental Agreement payments for specific purposes have undergone significant reform.
Looking more broadly than grants, the Commonwealth collects $14.9 billion more from Western Australia than it spends on the State. On a per head basis, this is by far the largest imbalance of any State.
A number of publications are available on the Commonwealth-State Finances links page. Questions on the discussion paper and any other material on this site can be emailed to Intergovernmental Relations.