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Legislative Assembly for the ACT: 1997 Week 8 Hansard (28 August) . . Page.. 2688 ..

FINANCIAL MANAGEMENT (AMENDMENT)

BILL (No 3) 1997

The Financial Management (Amendment) Bill (No 3) 1997 inserts a clause into the FMA which will allow the Territory to provide subsidies to taxpayers and to make payments for amounts paid as excess taxes or duty to the Commonwealth.

The requirement for this clause has come about as a result of a decision handed down on 5 August 1997 by the High Court, which ruled the New South Wales business franchise fee on tobacco is constitutionally invalid, and casts doubt on the constitutional validity of business franchise fees on petroleum and liquor products.

In light of this, the Commonwealth has agreed to a unanimous proposal by all states and territories to implement safety net arrangements, which consist of increases in Commonwealth customs and excise on tobacco and petroleum products and Wholesale Sales Tax on liquor products, and the introduction of a 100% windfall gains tax. These arrangements are intended to return to the States and Territories an amount equivalent to that previously raised through the business franchise fees levied on retailers.

Under the Constitution, the rates charged by the Commonwealth must be uniform across each state and territory. The rate that will be levied is higher than the rates previously charged by the ACT. Under the terms of the agreement with the Commonwealth, the Territory is required to provide subsidies to taxpayers for the extra taxes paid to the Commonwealth.

This amendment to the FMA allows the Territory to meet this commitment, without recourse to the Assembly to approve a separate appropriation.

This is the Bill which is laid before the Assembly today. However, discussions with Members have led to the Government proposing two amendments to the Bill as it currently stands. Due to the tight timeframe, it has not been possible for the Parliamentary Counsel to make amendments to the Bill before its introduction. I have asked Parliamentary Counsel to draft amendments which I will introduce during the detailed debate of the Bill.

The proposed amendments to this Bill will allow for a standing appropriation to cover the costs of administering the subsidy schemes to taxpayers. The amendment will require the Government to disclose any funding issued for this purpose in the notes to the financial statements of the department, allowing the Assembly full scrutiny of the standing appropriation.

The second amendment will allow for a sunset clause which gives effect to the proposed amendments for a period of just under three years - to the end of the 1999-2000 financial year. This will allow sufficient time for the proposed overhaul of the taxation system, and will allow the ACT to put in place permanent arrangements, depending on the final agreement with the Commonwealth.

I commend this Bill to the Assembly.

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