States Grants (Local Public Works) Act 1936

What are the strings attached?

The grants come with strict conditions. States can only use the money to:

• Pay interest and sinking fund charges (that is, the ongoing cost of repaying borrowed money — both the interest on the debt and the regular contributions set aside to eventually pay off the loan's principal) on approved loans for eligible public works
• The works must have started on or after 1 July 1935 and be approved by the State government
• The Commonwealth Treasurer must approve the loan terms and the specific public works

Critically, the Commonwealth's payment cannot exceed what the State itself contributes — the grant is designed to match or supplement the State's own financial contribution toward these loans. This ensures States have "skin in the game."

Other key rules:

• The money cannot be used to directly fund construction costs — only to service debt (repay loans)
• Priority must be given to works in regional and rural areas (outside metropolitan zones), and especially to projects that create the most employment opportunities
• Each State Treasurer must keep a separate account tracking every dollar received and spent
• States must provide an annual certified report (signed off by their Auditor-General) to the Commonwealth Treasurer showing exactly how the money was used

Why it matters

This Act was passed during the tail end of the Great Depression, when unemployment was high and public infrastructure was desperately needed. By subsidising the debt costs of local public works, the Commonwealth encouraged States and local councils to borrow and build — putting people to work without directly funding construction itself. The preference for regional projects and labour-intensive works makes the employment relief purpose very clear.