Appropriations, as distinct from grants and contract fees, are not subject to GST.

Do government incentives include GST?

Government payments aimed at giving income support to business are typically not for a supply and therefore will not have any GST implications. Providing something of value for the payment will require you to do something more than just meet the eligibility criteria.

Do Australian government agencies pay GST?

The payment from the Department to the government school isn't subject to GST because all requirements are satisfied. Even though the payment was calculated based on anticipated costs, it's not necessary to review the calculation once the actual costs of making the supply are known.