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Intergovernmental relations

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Intergovernmental relations are an essential part of the Australian federal system, particularly given the level of vertical fiscal imbalance between the States and the Commonwealth. As the Commonwealth has a broader range of revenue raising powers than the States, the Commonwealth is required to provide funding to the States so that States can meet their extensive expenditure requirements. These funds are provided either as general revenue payments or as payments for specific purposes.

The Intergovernmental Agreement on Federal Financial Relations provides the overarching framework for the Commonwealth's financial relations with the States. It establishes a foundation for the Commonwealth and the States to collaborate on policy development and service delivery, and facilitate the implementation of economic and social reforms in areas of national importance.

A number of forums exist to oversee this system of federal financial relations. These forums include the Council for Federal Financial Relations, COAG and Heads of Treasuries meetings.

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Last reviewed 14 February 2014