NO.015

MEETING OF THE MINISTERIAL COUNCIL FOR COMMONWEALTH-STATE

FINANCIAL RELATIONS AND OUTCOME OF LOAN COUNCIL MEETING

Today’s meeting of the Ministerial Council for Commonwealth-State Financial

Relations noted that, on the basis of current estimates, States and Territories

would receive:

• total GST revenue of $29,425.1 million in 2002-03 and $31,020.0 million

  in 2003-04; and

• total Budget Balancing Assistance (BBA) of $1,743.8 million in 2002-03

  and $1,014.8 million in 2003-04.

2003-04 is the first year in which any jurisdiction will no longer require

BBA. On the basis of the latest available estimates, Queensland, the ACT and

the Northern Territory will not require BBA in 2003-04 because their GST revenue

is in excess of the Guaranteed Minimum Amount (GMA).

GST Administration Issues

As the Australian Taxation Office (ATO) collects all GST revenue on behalf

of the States and Territories, the Intergovernmental Agreement (IGA) provides

that accountability and performance arrangements will be established between

the State and Territory Governments and the ATO. The Ministerial Council endorsed

a number of updates and amendments to the GST Administration Performance Agreement

between the States and Territories and the ATO.

The Ministerial Council also discussed GST administration costs and related

issues and agreed the ATO’s GST administration budget for 2003-04, consistent

with the requirement of the IGA that the States and Territories compensate the

Commonwealth for the costs of administering the GST.

Specific Purpose Payments (SPPs)

On the basis of current preliminary estimates, total SPPs will increase by

around 4.6 per cent, or $992.5 million in 2003-04. After abstracting from SPPs

paid either direct to local government or which pass “through” the

States to other bodies, SPPs “to” the States are estimated to increase

by around 3.2 per cent, or $500.8 million. Detailed estimates of the proposed

level of SPPs and their distribution among the States and Territories will be

included in the Commonwealth’s 2003-04 Budget.

National Competition Policy Payments

The Commonwealth will also provide National Competition Policy Payments of

up to approximately $758.6 million to the States and Territories in 2003-04,

as specified in the Agreement to Implement the National Competition Policy and

Related Reforms.

Each jurisdiction’s receipt of its per capita share of Competition Payments

will be determined once the Commonwealth has considered recommendations from

the National Competition Council’s assessment of progress under the Agreement.

Total Commonwealth payments to the States

The Statement of Estimated Payments (Attachment

A) includes current State-by-State estimates of the GMA, GST revenue and

BBA (Tables 1, 2, 3, 4 and 7), General Revenue Assistance (Tables 7 and 12),

SPPs (Tables 10 and 11) and total payments payable to the States and Territories

in 2002-03 and 2003-04 (Table 12).

The distribution of GST revenues amongst the States will be in accordance

with the final recommendation of the Commonwealth Grants Commission (CGC), which

was released on 21 March 2003.

The Ministerial Council noted long term projections of the State-by-State

impact of the reforms to Commonwealth-State financial relations (Attachment

B). The projections are only indicative guides. The actual impact on each

jurisdiction will be significantly affected by GST revenue growth and the CGC’s

final recommendations on the distribution of GST revenue.

Loan Council Allocations for 2003-04

Loan Council endorsed the Loan Council Allocations nominated by the Commonwealth

and each State and Territory for 2003-04 (Attachment

C).

Uniform Presentation Framework (UPF)

Loan Council agreed four proposals to further increase the transparency of

the Uniform Presentation Framework (UPF). These proposals focus on disaggregating

particular items within the UPF Operating Statement and adopting guidance on

the publication of ‘underlying’ budget results in the UPF. These changes are

to be included from 2002-03 Outcomes (Actuals) reports.

28 March 2003

CANBERRA

Contact: Dave Alexander    Ph. 02 6277 7340

ATTACHMENTS

A, B & C .pdf)