Commonwealth Grants Commission
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Treasury is responsible for Queensland's interactions with the Commonwealth Grants Commission.
The Commonwealth Grants Commission (CGC) is an independent statutory authority responsible for making recommendations about the distribution of general revenue assistance to the States. The general revenue assistance is distributed on the basis of horizontal fiscal equalisation which is embodied in the per capita relativities calculated annually by the CGC.
Horizontal fiscal equalisation has been defined as providing each State with the capacity to deliver the average standard of State-type services, assuming it operates at an average level of efficiency and makes the average effort to raise revenue from its own sources.
To calculate the per capita relativities, the CGC has developed a complex methodology to take account of differences in each State's capacity to raise revenue and differences in each State's ability to provide services. The main reason for the complexity of the methodology is that horizontal fiscal equalisation must take account of only those factors that are beyond a State's control. What States actually do in terms of revenue and expenditure policies cannot be allowed to influence the assessments.
Although the CGC updates its assessed per capita relativities each year (generally to take account of new data), it also conducts a comprehensive review of its methodology, the results of which are released every five years.
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Last reviewed 24 March 2011