Commonwealth Aid Roads and Works Act 1947

Rural and sparse area roads funding (from the £1.5 million annual payment):

• £1 million per year goes to States using the same population/area formula — but only for roads in rural, sparsely populated, or timbered areas, or for purchasing road-making equipment for areas where local councils can't afford it. This money generally cannot be used on declared State highways or main roads without the Minister's approval.
• £500,000 per year is kept by the Commonwealth to build and maintain strategic roads (roads of national importance declared by the Minister in the official gazette) and roads providing access to Commonwealth property.

Road safety (the one-off £100,000):

• Spent by the Commonwealth on promoting road safety across Australia, following a plan approved by the Minister.

Conditions attached to State payments

States don't get a blank cheque. To receive their share, each State must:

• Spend the money only on road construction, reconstruction, maintenance, and repair (up to one-sixth can go to other transport-related works)
• Follow a spending policy agreed to by the Commonwealth Minister
• Submit an annual plan of proposed road spending to the Minister before 30 June each year

Why does it matter?

This Act is an early and clear example of vertical fiscal imbalance in Australian federalism — meaning the Commonwealth raises money (through fuel taxes) that it then hands down to the States with strings attached. It locked in a user-pays logic (drivers buying petrol fund roads) while giving Canberra significant oversight over how States spend on infrastructure. It also embedded a deliberate bias toward rural and remote areas, and gave the Commonwealth the power to fund roads it considered strategically important for national defence or access to its own property.