States Grants (Universities) Act 1953

1. A top-up amount equal to one-third of that excess, up to a maximum cap; plus
2. A fixed base payment regardless of the formula calculation.

Strict conditions on the money

States can't just pocket the cash. The Act imposes binding conditions:

• The State must pass every dollar it receives on to the relevant university in the same year it receives it.
• The money must be used for running costs (teaching, research, administration) — not for building or major equipment purchases (called "capital expenditure").
• A specific slice of the fixed base payment must go toward the running costs of residential colleges (on-campus accommodation with teaching functions).
• If the Commonwealth's Treasurer (finance minister) finds the State has broken these conditions, the State must repay the money.

Other notable features

• The Act replaces the earlier States Grants (Universities) Act 1951 but validates payments already made under that old law.
• It backdates its operation to 1 January 1953.
• It corrects a historical error — it retrospectively fixes the funding figures that had been incorrectly applied to the NSW University of Technology under the 1951 Act.
• There is a special rule for Tasmania: money paid to the Joint Engineering Board of Management (a joint body running engineering and chemistry courses between the University of Tasmania and the Hobart Technical College) counts as money paid to the university for funding purposes.
• The Treasurer can make advance payments to States before final figures are calculated.
• Funding comes from the Consolidated Revenue Fund (the main Commonwealth account).

Why does it matter?

This Act is an early example of the Commonwealth using its financial power to directly support Australian universities — a role that has since grown enormously. At the time, universities were almost entirely funded by state governments and student fees, and this Act represented a significant step toward federal involvement in higher education funding.