The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

14 May 2013

Funding boost for States under Labor Government

The 2013-14 Budget provides record funding to State and Territory Governments for infrastructure and services including health and education.

This Budget provides $95.3 billion to the States in 2013-14, up $3.3 billion (or 1.5 per cent in real terms) from 2012-13, with estimated funding in 2012-13 increasing by $2.3 billion since MYEFO.

This growth comes at a time when Commonwealth tax revenues are being written down substantially, clearly demonstrating the Gillard Government's commitment to funding State services and infrastructure.

The forward-looking commitments locked in through this Budget ensure that Commonwealth dollars drive better outcomes for State services.

Between 2007-08 and 2011-12, based on final budget outcome data, the Commonwealth provided over $450 billion in assistance to the States. This is 27.9 per cent more in real terms than what was provided by the former Liberal Government over the equivalent time period (2002-03 to 2006-07).

Looked at another way, total payments to the States between 2007-08 and 2011-12 increased by an average of 3.6 per cent per year in real terms compared to 3.1 per cent annual real growth between 2002-03 and 2006-07 under the previous Liberal government.

In 2008-09 alone, in Labor's first full year in office, the Government increased specific purpose payments to the States by around $7 billion, raising the baseline for Commonwealth funding which has been maintained.

This funding was allocated prior to the stimulus packages that emerged as a response to the Global Financial Crisis and provided significant additional support to State budgets (over $22.7 billion).

This funding protected jobs in every state in Australia and delivered a $14.7 billion capital upgrade to Australian schools that will ease pressure on the States in the future.

Between 2007-08 and 2011-12, excluding stimulus, the Commonwealth increased key service delivery funding for States by an average of 11.5 per cent per year in nominal terms through specific purpose payments. This was higher than the average 6.9 per cent growth in payments in nominal terms under the Liberal government between 2002-03 and 2006-07.

From 2014-15, the National Health Reform Agreement moves into a new era of funding, with Commonwealth funding for the first time being tied to the actual number of services delivered by state hospitals under an activity-based funding model that will drive efficiency while ensuring no loss of quality. The Commonwealth has guaranteed at least $16.4 billion in additional funding for state hospital services between 2014-15 and 2019-20.

Under the National Health Reform Agreement, states will not be able to reduce their funding and rely on the additional Commonwealth funding to plug the gaps – they must maintain their efforts, too.

The Gillard Government is providing the States with $1.4 billion more in the 2013-14 financial year alone in National Health Reform funding than they would have received if the arrangements put in place by Tony Abbott as Health Minister had remained.

Commonwealth National Health Reform funding from 2014-15 is anticipated to grow at over 10 per cent annually over the forward estimates period in nominal terms (8 per cent real in terms), which means that the Commonwealth's overall health funding to the States will be double in nominal terms what was being provided when Labor came to Government by 2016-17.

DisabilityCare Australia is the most fundamental social policy reform in Australia since Medicare. This major investment – led by the Commonwealth – will ensure that Australians with significant and permanent disability will get the support they need when they need it.

The Commonwealth Government will provide funding of $11.7 billion to DisabilityCare Australia in 2019-20, the first full year after national roll-out. This represents over 50 per cent of total costs in that year – a dramatically increased funding share in this important area to support DisabilityCare Australia.

In addition, the States will be allocated $9.7 billion over 10 years as their share of the DisabilityCare Australia Fund.

Even ahead of these new arrangements, the Commonwealth is delivering $550 million more to the States in 2013-14 for the disability sector than what the previous government's arrangements were projected to deliver.

On education, the Gillard Government has committed to further significant funding for schools under the new National Plan for School Improvement so that our schools are in the top 5 in the world for reading, writing and maths by 2025. A new needs-based funding model will support a range of evidenced-based reforms in the National Plan for School Improvement with the aim of ensuring that all students get the support they need to succeed. This will see the Commonwealth provide $9.8 billion over six years from 2014-15 to implement a new needs-based funding model for schools.

This major new injection of funding comes on top of the $7.1 billion additional funding for schools that the Labor Government has provided since coming to office, over what the previous government's arrangements were projected to deliver.

Let no one be in doubt about the Gillard Government's commitment in these areas.