The Australian central government makes grants to the states and territories, three-quarters as general revenue subventions. The grants fund over 40 percent of the general government spending of the state, territory and local governments. Specific-purpose grants to selected states do the most damage to political responsibility. It would improve political accountability if the states and territories were responsible for funding their own spending. This would require a massive increase in revenue-raising by the states and territories, and for the federal government to share the income tax base. Less drastic would be for the states and territories to be responsible for their funding on the margin, which could be achieved if grants were made equal per capita.