NO.107

NATIONAL COMPETITION POLICY PAYMENTS TO STATES AND TERRITORIES FOR 2003-04

The Treasurer today announced that the Australian Government will make competition

payments to the States and Territories of more than $578 million in 2003-04.

The payments follow an independent assessment by the National Competition Council

of progress by the States and Territories in implementing National Competition

Policy (NCP) reform commitments.

The estimated maximum level of competition payments in 2003-04 is $759 million.

The National Competition Council (NCC) recommended $53.9 million in the

form of permanent deductions and $126.9 million in suspensions.

The National Competition Council has indicated that it will recommend that

specific suspensions be lifted and reimbursed if and when jurisdictions sufficiently

progress reform. Similarly, with respect to pool suspensions, the Council will

reassess these penalties in subsequent assessments and, where satisfactory progress

is made, may recommend that the suspension be lifted or reduced and the suspended

amounts reimbursed.

When NCP agreements were adopted by all the Australian, State and Territory

governments in 1995, legislation reviews and associated reforms were to have

been completed by 2000. In November 2000, the Council of Australian Governments

agreed to extend the deadline for these reviews to June 2002. Subsequently,

governments were provided a further year in which to finalise their reviews

and responses. This year’s recommendations by the NCC recognise the length of

time that jurisdictions have had to undertake NCP reform commitments entered

into in 1995.

NCP does not require governments to repeal all restrictions on competition

or to deregulate or privatise industries. It requires governments to undertake

transparent and rigorous reviews of legislation that restrict competition and

to reform those competitive restrictions, except where it would be contrary

to the public interest to do so.

The public interest test means that restrictions on competition that are of

net benefit to the community as a whole can be maintained, unless that net benefit

can be achieved in other, less anti-competitive, ways.

Payments and penalties for 2003-04 (subject to adjustment for changes in CPI,

population estimates and supplementary assessments) are:

In early 2004 the Council will conduct supplementary assessments of New South

Wales’ and Victoria’s progress with implementing water reform. These processes

may have implications for these States’ competition payments.

Details of the 2003 assessment will be available on the National Competition

Council’s website (www.ncc.gov.au).

These competition payments are entirely separate from GST revenue and Budget

Balancing Assistance paid to the States. A separate release on these payments

has been issued today showing payments to the States exceeding the guaranteed

amount by $575 million in 2003-04.

CANBERRA

8 December 2003

Contact: David Alexander

02 6277 7340