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Legislative Assembly for the ACT: 2000 Week 1 Hansard (17 February) . . Page.. 255 ..

MR HUMPHRIES (continuing):

I take on face value the promise of the Commonwealth that the States and Territories will be no worse off. We will need to see how that is actually carried through in practice. The situation with respect to loans from the Commonwealth to the States and Territories is, I understand, generally an issue for the Commonwealth's accounting purposes. They are, at least in year one of the GST arrangements, technically loaning the ACT and other jurisdictions the money which will constitute its guaranteed minimum amount. However, the amount which has been loaned to the ACT has been loaned on the basis that it is an interest free loan, and in year two of the GST the Commonwealth will give us the money to be able to repay the loan.

So which bank offers those sorts of loans, Mr Speaker? Unfortunately, no bloody bank. If there was, I would be a customer of it tomorrow. It is interest free and they repay it for you after one year. I do not think the issue of a loan is a problem to the ACT. It comes within the terms of that GMA, that guaranteed minimum amount, that we should not be any worse off as a result of the GST. So any cost associated with that ought to be met by us being able to recover that under the GMA.

There is a cost associated with the ACT doing its preparation for the GST. That is not a cost which I think is recoverable under the intergovernmental agreement. We put that cost in the ACT at $3.5m. It is in the budget for this year. I do not actually quibble with that. I think that is a reasonable investment, given that after three years we get a positive benefit from the GST, according to the preliminary calculations that have been done. That positive benefit rises significantly after a number of years. By year 10 of the GST arrangement the ACT will be $73.9m better off. I think that is the right figure. Even if there are some overly conservative or optimistic estimates in that figure, it clearly will be a very significant advance for the ACT if those amounts are flowing. That is a reasonable reason to put in some money at this stage - to get that kind of return after 10 years.

MR QUINLAN: I have a supplementary question. I gather from what you have said that if, in fact, there is a shortfall, we get an interest free loan for a number of years. Then that is taken off any excess and, until we get square, we are going to have a constant - - -

Mr Humphries: That is sort of what I am saying, yes.

MR QUINLAN: The bottom line of the draft budget is more the result of accounting technicalities than of a genuinely balanced budget, like above the line treatment of abnormal superannuation changes, or the borrowing of an American standard that I understand does not exist in Australia. Does it not follow that if there are loans, if it is loans that we are getting, then we are not in the black next year?

MR HUMPHRIES: No, it does not follow because the loans, first of all, are interest free.

Mr Stanhope: It is still a loan.

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