Main Roads Development Act 1923

30 June 1923

Section 96 of the Australian Constitution gives the Australian Parliament the power to make payments to the states on ‘such terms and conditions as the Parliament thinks fit’. These ‘tied grants’, or 'specific purpose payments', first used in the Main Roads Development Act 1923, have allowed the Australian Parliament to influence areas of state responsibility.

The Australian Government collects more money than the states. Although states can refuse to accept grants from the Australian Parliament, in some cases states have been forced to accept the Australian Parliament’s conditions to secure funding for projects. For example, the Main Roads Development Act 1923 granted $1 million to the states to build main roads to develop rural areas and create jobs. The states were only allowed to spend the money on works approved by the Australian Parliament.

Tied grants are a major part of state budgets. The Australian Parliament provides funds for hospitals, schools, roads and housing – all areas of state responsibility. By providing these grants, the Australian Parliament aims to achieve national outcomes without taking over state responsibilities. The Australian Parliament also provides untied grants to the states. The states can spend this money without conditions set by the Australian Parliament.