An analysis of the Aboriginal component of Commonwealth fiscal flows to the Northern Territory

This paper focuses on the Northern Territory (NT) as a case study for the examination of Commonwealth/State financial relations in the area of Aboriginal affairs. The paper considers in detail the procedures by which Commonwealth revenue is allocated to the Territory. It describes the role of the Commonwealth Grants Commission (CGC) in the budget process, and the impact of fiscal equalisation on the Territory's budgetary outcome. The paper pays particular attention to the nature of the 'Aboriginal components' in this budgetary assessment process, especially the impact on Commonwealth allocations, of disability factors related to the Territory's Aboriginal population, and the CGC assessment of the 'Aboriginal Community Services' expenditure function. It is argued that the health of the NT budget is inextricably bound to the Territory's Aboriginal population. Recent calls for a more comprehensive accounting of Territory Government expenditure on services and programs for Aborigines reflect increasing awareness of the fiscal significance of this component. Future planning for the design, delivery and funding of programs and services for Aboriginal people will require a breakdown of expenditure data at the State and Commonwealth level. The present paper precedes CAEPR Discussion Paper No. 30 which examines the same issue of Commonwealth/State financial relations in the NT from the perspective of actual government expenditure on programs and services oriented to Aboriginal people. In effect, the present paper considers the macro-funding environment in which the Territory budget is determined, and analyses the nature and impact of the 'Aboriginal components' within that fiscal process; whilst Discussion Paper No. 30 examines the expenditure which the Territory Government allocates to the delivery of particular programs and services for the Territory's Aboriginal population