Over time, the Commonwealth’s overall legal expenditure has, in actual terms, fluctuated. However, legal aid expenditure has been expanding for the last four years, due mainly to the provision of additional funding since the 2011-2012 Budget to make available legal aid for ‘people smuggling, national security and drug-related cases’. However, as a proportion of total national legal aid funding, the Commonwealth’s contribution has decreased overtime from over 60% in 1994 to as low as 32% in 2010, while increasing slightly in the 2013-2014 budget to approximately 35% of total funding.
Constitutional basis for legal aid funding to states and territories
Section 96 of the Australian Constitution provides that the Commonwealth may ‘grant financial assistance to any State on such terms and conditions as Parliament thinks fit’. These are known as ‘Specific-Purpose Payments’ (SPPs). Legal aid funding is currently provided through SPPs to state and territory governments on the terms contained in the National Partnership Agreement on Legal Assistance Services (National Partnership).
Why the Commonwealth funds legal aid
The Commonwealth’s involvement in legal aid funding has expanded over time, in part as a result of the obligations under international law, including:
- the International Covenant on Civil and Political Rights (ICCPR)
- the International Covenant on Economic, Social and Cultural Rights (ICESCR) and
- the Universal Declaration of Human Rights (UDHR).
Successive Australian governments entered into those commitments on the understanding that democratic societies are underpinned by legally enforceable rights.  Access to justice is crucial in making these rights and duties a reality. A legal aid framework exists to allow all Australians an elementary right of access to legal advice and services, so as to satisfy the premise that all are equal before the law:
The mission of legal aid commissions is to provide access to justice to marginalised and economically disadvantaged Australians. (emphasis added).
Arguably, it can be considered the responsibility of governments to provide legal aid services on the basis of numerous moral, political, social justice and legal terms (and especially to marginalised and economically disadvantaged persons).
How the Commonwealth provides legal aid funding
Since 1997, Commonwealth funding for legal aid has been provided through SPPs, which has allowed the Commonwealth to specify the priorities to which legal aid funding should be made available.
This approach to legal aid funding has continued, with the National Partnership established to support the delivery of legal assistance services by legal aid commissions, community legal centres, Aboriginal and Torres Strait Islander Legal Services and family violence prevention legal services.
The National Partnership defines legal assistance services as encompassing all of the sector-wide legal service providers referred to above. In contrast, legal aid services are defined as Commonwealth funded legal aid services delivered by legal aid commissions.
What does the Commonwealth pay for?
In 1996–1997, the Australian Government moved to a purchaser-provider model that makes a clear distinction between the responsibilities the state and territory governments and those of the Commonwealth.  As a result, Commonwealth funding for legal aid services is today only provided for Commonwealth law matters except for:
- the provision of early intervention legal education, information, advice, assistance and advocacy services and
- legal representation of individuals whose legal problems involve a mixture of Commonwealth family law and state or territory law family violence and/or child protection issues (as described in the Commonwealth legal aid services ).
Figure 1 below shows actual payments for the provision of legal aid services to states and territories between 1994–1995 and 2013–2014. Funding has fluctuated overtime, increasing by $17.2 million in 2010–2011, with smaller increases from 2011–2012 onwards.
Figure 1: payments for the provision of legal aid services to states and territories
Source: Parliamentary Library estimates
The Commonwealth maintains separate agreements in relation to legal assistance services (that is, not delivered by state and territory legal aid commissions). This includes funding for community legal centres, Aboriginal and Torres Strait Islander legal services and family violence prevention legal services.
Spending on legal assistance services (as defined in the National Partnership) has increased steadily over the past five years, from $140.8 million in 2009–2010 to $167.4 million in the 2013–2014 budget. 
What do the states and territories pay for?
Since the 1996-1997 reforms, states and territories maintain responsibility for funding matters arising under their laws, except where the individual’s legal problems involve a mixture of Commonwealth family law and state or territory family violence and/or child protection issues.
In contrast to the pattern of rising spending shown above, the proportion of overall legal aid funding provided by the Commonwealth has decreased from 51 per cent in 1997 to between 32 per cent (2010) and 35 per cent in the current Budget.
Peopling smuggling cases and legal aid
As at 30 June 2012, there were 152 people smuggling cases, many of which were being prosecuted in state and territory courts. In response, some state and territory governments have called for increased funding for their courts, jails and legal aid programs to cope with the increased demand on those services.
Whilst this has been formally discussed at the Standing Council on Law and Justice (without agreement), the Government has indicated that it considers funding for people smuggling prosecutions no different from funding for other types of Commonwealth offences.
. 1994 figures from Law Council of Australia (LCA), Erosion of legal representation in the Australian justice system, report prepared for the Australian Institute of Judicial Administration, National Legal Aid and Aboriginal and Torres Strait Island Legal Services, LCA, February 2004, p. 24, access 21 May 2013; 2010 figures from PricewaterhouseCoopers (PWC), Legal aid funding, Current challenges and the opportunities of cooperative federalism, Report prepared for the Australian Bar Association, Law Council of Australia, Law Institute of Victoria and Victorian Bar Council, PWC, December 2009, p. 52, accessed 17 May 2013; 2013–14 figures from LCA, Law Council says legal assistance sector funding falls short, media release, 14 May 2013, accessed 15 May 2013.
. Hillary Sommerlad, ‘Some Reflections on the Relationship between Citizenship, Access to Justice, and the Reform of Legal Aid’, Journal of Law and Society, 31(3), September 2004, pp. 345, 346–348.
. The figures presented are actual, not adjusted expenditure. For consistency, figures for 1994–1995 through to 2007-2008 were drawn from the relevant Portfolio Budget Statements, e.g. the 1994–1995 figures were drawn from: Australian Government, Portfolio budget statements 1995-1996: budget related paper no. 4.1: Attorney-General's Portfolio, p. 75. The figures for 2008–2009 through to 2011-2012 were drawn from the respective Final Budget Outcome papers, e.g. the figures for 2008–2009 were drawn from: Australian Government, Final Budget Outcome 2008-2009, p. 81. Figures for 2012–2013 and 2013–2014 were drawn from the respective Budget Measures paper, e.g. the figures for 2013–2014 were drawn from: Australian Government, Budget Measures: budget paper no. 3: 2013–14, p. 106, accessed 15 May 2013. Other sources provide figures that can differ substantially. For example, PWC state that in 1996/1997 the Commonwealth’s contribution to legal aid funding was $126.6 million, whilst the Law Council of Australia state that for the same period funding was $159.2 million: PWC, Legal aid funding, current challenges and the opportunities of cooperative federalism, op. cit., p. 26, LCA, Erosion of legal representation in the Australian justice system, op. cit., p. 86.
. These figures do not include funding provided to state and territory legal aid commissions. Expenditure was calculated by adding a consistent set of budget items listed in Programs 1.3 and 1.5 of the Attorneys-General’s Portfolio Budget Statements and Annual Reports that fall under the category of legal assistance services (that is, they are not delivered by state and territory legal aid commissions). As a number of programs have changed over time, developing accurate comparisons prior to 2009-2010 is problematic, and hence have not been not included.
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