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Legislative Assembly for the ACT: 2000 Week 1 Hansard (17 February) . . Page.. 298 ..

MR HUMPHRIES (continuing):

To determine whether the States and Territories are worse off, all state and territory treasuries have agreed to a set of estimates which reflect state and territory future revenue collections under the current system. These estimates cover a period of 10 years, although most jurisdictions are expected to be better off in half that time. These estimates are used to determine the ACT's guaranteed minimum amount; that is, the amount it must receive from the Commonwealth to ensure that it is no worse off. The calculation of the guaranteed minimum amount incorporates the revenues forgone, plus the additional costs which will be imposed on the ACT as a result of the administration of the GST.

If the ACT's entitlement to GST revenue falls short of this guaranteed minimum amount, the Commonwealth will top up the level of financial assistance to the Territory to ensure that its financial position is no worse off due to tax reform. These top-up payments will continue until the Territory's budget position is no worse off under the GST arrangements than it would have been had the reforms to the taxation system not taken place.

Within that framework, recent modelling of indicative benefits by the Commonwealth and State treasuries suggests that, after the completion of the guarantee, the ACT will be in an improved position by $1.7m in 2003-04, the fourth year of operation. Thereafter, the ACT is expected to be better off by $14.9m in 2004-05 and $10.3m in 2005-06, rising to $73.9m by 2009-10. However, these estimates are indicative only at this stage and were not incorporated in the 2000-01 draft budget and forward estimates for that very reason.

The Commonwealth Grants Commission will determine the relative shares in the context of its 2000 update of relativities, which is due to be released on 25 February 2000. The recommendations will then be submitted to the new Ministerial Council on National Tax Reform for approval on 17 March 2000. It is at that point that the final measures will be factored into the ACT's 2000-01 budget.

Mr Speaker, I recognise that the implementation of the GST will require some up-front funding from the budget. This is estimated to be around $2.5m in 1999-2000, and will be funded from the Treasurer's advance. There will be other implementation costs that will be provided from within existing agency budgets, currently estimated at about $1m.

In terms of the effect that the GST will have on the Territory's financial statements, many of these issues are still to be addressed by the Commonwealth. The effect on government purchases of the abolition of wholesale sales tax is still being calculated. The ACT, like all States and Territories, is heavily reliant on the Commonwealth Government to make speedy decisions on issues relating to the GST implementation.

One of the major factors governing the timing of the GST implementation across governments is the speed at which the Commonwealth responds to requests for information. For example, the Commonwealth has only just released - on Monday, 31 January 2000 - the draft determination of GST-exempt state and territory taxes, fees and charges. Similarly, the Urgent Issues Group, the accounting body responsible for

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