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Legislative Assembly for the ACT: 1999 Week 4 Hansard (20 April) . . Page.. 991 ..

MS CARNELL (continuing):

The intergovernmental agreement provides for all GST revenue to be directed to the States and Territories, replacing financial assistance grants from 1 July 2000. In addition, the IGA requires the abolition of nine inefficient State-Territory taxes, the introduction of a first home owners scheme, and controls on the power of the Commonwealth to change the GST rate or base.

As could be expected, negotiations were not all plain sailing, and a number of difficult issues required resolution. Importantly, from a State-Territory perspective, leaders believe the Commonwealth's original package fell short of the mark in compensating jurisdictions for the impact of the GST on their operations. A list of seven outstanding issues were identified at the leaders forum which I chaired on the eve of the conference and subsequently presented to the Prime Minister. We were collectively successful in obtaining agreement to six of the seven items on the day.

Of particular importance was the Prime Minister's agreement to increase compensation to the States and Territories by close to $1 billion, covering the loss of wholesale sales tax equivalent payments from government business enterprises, totalling $338m over three years; the exclusion of savings to local governments from the removal of embedded WST, meaning an additional $210m over three years to the States and Territories; the impact of the GST on public housing costs, estimated at $269m over three years; and the bringing forward by one year of the capacity for States to keep the benefits of increased funding from GST revenue, which amounts to an estimated $200m.

The impact for the ACT of these concessions is increased funding of approximately $40m over the first three years of the GST, that is, 2000-01 to 2002-03. This additional $40m is approximately 4 per cent of the $1 billion additional compensation agreed by the Commonwealth at the Premiers Conference, representing an outstanding result for the Territory.

Mr Speaker, in conclusion, it must be said that the Premiers, Chief Ministers and the Prime Minister set aside political differences to reach this historic agreement which is undoubtedly in the national interest and will forge a stronger federation. Three of the six Premiers who signed the agreement head State Labor governments. I must say that they shared an appreciation for the big picture and a willingness to do what is best for the broad community which is regrettably absent in those opposite. The willingness of the Labor Premiers to put aside their ideological baggage is a clear reflection of the importance of these reforms. It was the most constructive and positive Premiers Conference I have attended, due in no small part to the recognition by the Commonwealth and all the States and Territories that this is an historic opportunity to reform our ramshackle tax system. From a personal perspective, it was wonderful seeing leaders in this country of different political persuasions working together to ensure that this country does have a future in the next century.

I present the following paper:

Outcome of the 1999 Premiers Conference and Australian Loan Council - ministerial statement, 20 April 1999.

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