Australia's Future Tax System

Final Report: Detailed Analysis

Chapter F: The transfer system

F6. Transfers tied to goods and services

Key points

While transfers are usually thought of as cash payments, governments also provide transfers such as concessions and payments that are 'tied' to the purchase, or supply, of a particular good or service. These transfers are often provided to encourage the consumption of goods and services that help people improve their capabilities.

All three levels of government provide concessions. The approach across the federation is not always coherent and the interaction of concessions with other types of transfers provided by different levels of government makes it difficult to determine whether concessions provide value for money. The Productivity Commission should review concessions across all levels of government and provide recommendations for consideration by the Council of Australian Governments (COAG).

Governments also support people to improve their capabilities through the direct provision of public services such as health and education. The capacity of the tax and transfer system to deliver improvements to people's wellbeing is highly dependent on how governments fund and deliver these services. The Productivity Commission should also examine the principles of public service delivery and the mechanisms that are available to governments to deliver public services.