The Commonwealth Grants Commission (CGC) provides advice to the Australian Government on the distribution of GST revenue among the states and territories. We are a small independent agency operating under the Commonwealth Grants Commission Act 1973.
The CGC consists of:
- a Commission comprising a Chairperson and no less than 2 other Members, appointed by the Governor- General;
- CGC staff, who provide support and advice to the Commission based on rigorous research and analysis.
Our workplace is small and friendly, and we are committed to flexible work practices. We have predictable workflows that support a healthy work-life balance. The CGC’s work is a key plank of Australia’s federal financial relations, with an impact on Australians’ wellbeing.
Some states found the move to federation more fiscally challenging than others.
By the 1930s, it was acknowledged that the fiscal differences between states were larger and more permanent than previously thought and the concept of the federal government making additional payments to the less-populated states was well established.
The Commonwealth Grants Commission was established in 1933 with the aim of advising the Commonwealth on the payment of special grants to states to recognise these fiscal differences.
Early in its existence, the Commission developed the principle of determining a special grant as the amount needed for a state to function at a standard not considerably lower than others.
The role of the Commission expanded in the late 1970s when the Australian Government adopted a policy of ‘new federalism’, that is, devolving or transferring powers back to the states. The Commission was tasked with assessing the relative financial capacity of each state and then recommending how much each one should receive in Financial Assistance Grants. States could then provide government services at a comparable standard, if they chose to do so.
The outcome of this policy, known as horizontal fiscal equalisation (HFE), was that state governments were in a position to provide their residents with comparable services.
Current arrangements for distributing GST revenue
In 2018, the Commonwealth Parliament legislated a new way to distribute GST revenue among the states and territories (states).
The key elements are:
- a new equalisation benchmark linked to the fiscally stronger of NSW or Victoria
- a GST relativity floor
- Commonwealth funded top-ups to the GST pool
- transitional arrangements, staging implementation of the new equalisation benchmark and giving states a no-worse off guarantee.
For more information about our activities, please read About GST distribution.