NO.015

$20 MILLION FOR CLUBS IN NEW SOUTH WALES

All registered clubs in New South Wales will be guaranteed to receive the gaming

rebate which was earlier denied by the NSW government. The New South Wales government

will be compensated for the amount under its Guaranteed Minimum Amount (GMA)

from the Commonwealth.

Following the introduction of the GST the States and Territories were required

to adjust their gambling tax arrangements to take account of the impact of the

GST on gambling operators. All States gave effect to this by reducing their

gambling taxation rates by 9.09 per cent. In New South Wales, registered clubs’

first $100,000 of gambling profits were taxed at zero per cent before the GST

was introduced, while clubs’ gambling profits between $100,001 and $200,000

were taxed at one per cent. As these particular rates could not be reduced by

the required 9.09 per cent, the New South Wales government agreed to pay clubs

an up front rebate to compensate clubs for the period of 2000-01 to 2003-04

to ensure that the policy intent of no increases in taxes on gambling was achieved.

The Commonwealth Government agreed to guarantee the rebate to the New South

Wales government.

The New South Wales government threatened not to continue the rebate last

year. Following pressure from clubs and the public, the New South Wales government

announced it would pay a rebate from 2004-05, but chose to confine the rebate

to clubs with an annual gaming income of up to $1 million.

Subsequently, after further pressure, the New South Wales Government decided

to extend the rebate to all registered clubs from 2004-05.

Since the New South Wales Government has now decided to pay the rebate to

all registered clubs, without a qualifying cap of $1 million in annual gaming

income, the Commonwealth Government accordingly agrees to include the cost of

the full rebate in New South Wales’ GMA in 2004 05 and subsequent years.

This will ensure that New South Wales is not worse-off as a result of paying

the rebate.

The Commonwealth Government’s commitment to include the cost of the

full rebate in New South Wales’ GMA will cost the Commonwealth Government

an estimated $20 million per annum until New South Wales comes off Budget Balancing

Assistance (BBA). On the basis of estimates released in the Mid Year Economic

and Fiscal Outlook 2003-04, New South Wales will come off BBA in 2006 07.

CANBERRA

25 March 2004

Contact:

David Alexander

02 6277 7340