Budget Paper No. 3 — Federal Financial Relations

Source: Budget Paper No. 3: Federal Financial Relations (PDF, 4.81 MB) — local: source-docs/bp3_2026-27.pdf, text: source-docs/bp3_2026-27.txt

Headline (BP3 Part 1)

In 2026–27, the Australian Government will provide $207.8 billion in total payments to the states and territories — 24.9% of total Australian Government expenditure and 6.7% of GDP.

Component	2026-27	Share
Payments for specific purposes	$97.5 billion	11.7% of Cwlth expenditure / 3.2% of GDP
General revenue assistance (mostly GST)	$110.3 billion	13.2% of Cwlth expenditure / 3.6% of GDP
of which: GST-related payments	$109.8 billion
Total payments	$207.8 billion	24.9% of Cwlth expenditure / 6.7% of GDP

The 2026–27 specific-purpose payments figure represents a $4.1B (4.0%) decrease vs 2025–26, primarily due to bringing forward Financial Assistance Grants from 2026–27 into 2025–26 plus a temporary fuel-disruption slippage adjustment in the Infrastructure Investment Program.

Major National Agreements (4-year totals 2026-27 to 2029-30)

Agreement	4-year total	Sector
National Health Reform Agreement (public hospitals)	$168.7 billion	Health
Better and Fairer Schools funding	$147.0 billion	Education
Infrastructure Investment	$53.6 billion	Transport
National Skills Agreement	$9.4 billion	VET
National Agreement on Social Housing and Homelessness	$7.7 billion	Housing
National Access to Justice Partnership	$3.2 billion	Justice
National Agreement on Foundational Supports	$1.1 billion	Disability (NDIS pre-tier supports)
HFE transition payments ("No Worse Off" guarantee)	$21.8 billion	Cross-cutting
Permanent boost to GST pool	$1.1B in 2026-27 alone (growing)	GST

National Agreement payments total $77.3 billion in 2026–27. National Partnership payments total $20.2 billion.

Payments to states and territories — 2025-26 ($m, BP3 Table 1.1)

State	Specific-purpose	GST-related	Total ($m, 2025-26)
NSW	28,096	28,268	≈56,364
VIC	25,790	28,466	≈54,256
QLD	22,572	16,932	≈39,504
WA	11,242	8,055	≈19,297
SA	8,166	9,779	≈17,945
TAS	2,420	3,863	≈6,283
ACT	1,693	2,125	≈3,818
NT	2,523	4,850	≈7,373
Total	101,598	102,338	—

Major BP3 sections (with chapter PDFs)

Part / Chapter	Page	Content
Part 1 — Australia's Federal Relations	p. 1	National payments overview, GST, HFE
Part 2 — Payments for specific purposes	p. 13
Health	p. 18	National Health Reform funding, public hospital growth funding, prevention
Education	p. 45	Better and Fairer Schools, higher-ed
Skills and workforce development	p. 51	National Skills Agreement
Community services	p. 56	Carer Payment, family support, Indigenous
Affordable housing	p. 64	Social Housing & Homelessness Agreement, Local Infrastructure Fund
Infrastructure	p. 70	Bruce Highway, M1 NSW, Suburban Rail Loop, ARTC, Active Transport
Environment, energy and water	p. 91	Net-zero transformation, water programs
Contingent payments	p. 116	Disaster response (incl. $2.5B uplift)
Other payments	p. 118	Misc. specific-purpose grants
Part 3 — General revenue assistance	p. 133
GST payments	p. 134	$109.8B GST-related payments in 2026-27
Other GRA	p. 139	Mirror taxes, FAGs
Mirror tax arrangements	p. 140	NT and ACT mirror tax credits

GST and the "No Worse Off" guarantee

GST-related payments to the states in 2026–27: $109.8 billion.
The Commonwealth continues its permanent boost to the GST pool (the deal that made WA whole), worth +$1.1B in 2026–27 — the boost grows annually with the underlying pool.
HFE transition payments ("No Worse Off" guarantee) total $21.8B over 2026-27 to 2029-30.

Cross-references

Healthcare payments → see Theme 02 and Theme 05.
Schools funding → Better and Fairer Schools (in BP3 Education chapter).
Foundational Supports / Thriving Kids → Theme 05 §5.1.
Affordable housing → Local Infrastructure Fund Theme 02 §2.3.
Infrastructure → Theme 06 §6.3.