Commonwealth Grants Commission
International Centre for Economic Research
This Paper provides a detailed description of fiscal federal relations in Australian.
The keystone to those relationships is the application by the Commonwealth Grants
Commission of the principle of fiscal equalisation — that each State should be able to
provide the same standard of services to its population, if it operates at the same level of
efficiency and makes the same effort to raise revenues from its own sources.
The Paper pays particular attention to the processes by which this principle is
implemented. It illustrates the extent to which expenditure needs as well as revenue
capacities are measured and the impacts these assessments have on the per capita
distribution of grant revenues between the Australian States.