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Legislative Assembly for the ACT: 1996 Week 7 Hansard (18 June) . . Page.. 1830 ..

MRS CARNELL (continuing):

Although I received a fair hearing, the Prime Minister made it quite clear that he was not prepared to support any application for special revenue assistance. I was not happy with the outcome and reinforced the ACT's arguments at the conference. Nonetheless, I was successful in convincing the Prime Minister to review the Commonwealth's decision to charge the ACT $27.6m for an outstanding claim relating to ACT forests not settled at the time of self-government. Additionally, the Prime Minister suggested that I should raise with the Federal Treasurer the issue of extending the Territory's transitional funding arrangements, due to expire next year. I have written to the Treasurer asking that this be included in the 1997 terms of reference for the Commonwealth Grants Commission. The position adopted by the Commonwealth has effectively put an end to all States' future claims for special revenue assistance.

I turn to the actual conference itself. Members would be aware of the media reports surrounding the prolonged negotiations regarding the Commonwealth's offer to the States and Territories. It is important to note from the outset that the Federal Government's plan was to claw back $1.2 billion in sales tax from States and local governments. However, States and Territories were of the view that the sales tax proposal would ultimately raise as much as $1.6 billion. Approximately one-half of this was required to fund the real per capita guarantee of the previous Labor Government. The other half was to assist the Commonwealth in addressing its budgetary position. This sales tax impost would have been an ongoing and growing tax grab from the States and Territories. The cost to the ACT would have been between $20m and $40m every year forever. It is now history that the States and Territories said no - and very definitely no, Mr Speaker. Instead, the States and Territories were able to extract from the Commonwealth a "reasonable" outcome, while recognising the Commonwealth's fiscal problems.

The main points of the agreement are as follows. The Commonwealth will levy sales tax on executive fleets at all tiers of government, which is expected to raise approximately $100m. The impact on the ACT is estimated to be approximately $700,000. States and Territories will contribute approximately $1.6 billion to the Commonwealth over three years - $619m in 1996-97, $640m in 1997-98 and $300m in the final year, 1998-99, with the burden distributed on an equal per capita basis. The impact on the ACT is around $10.4m, $10.8m and $5m respectively.

The Commonwealth agreed that these payments will need to be reviewed annually at further Premiers Conferences in light of the Commonwealth's own fiscal position. Most importantly, during this time the real per capita guarantee applying to the pool of financial assistance will continue to operate. In addition, the schedule of competition payments agreed at last year's meeting will be maintained. States and Territories went into the Premiers Conference not knowing what lay in store for the future of specific purpose funding arrangements. We left the conference with an undertaking that specific purpose payments to the States and the Territories will be reduced by no more than 3 per cent in the coming Federal budget. Three per cent of total SPPs currently being paid to the ACT is approximately $5m.

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