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Legislative Assembly for the ACT: 2000 Week 4 Hansard (30 March) . . Page.. 1081 ..

FINANCIAL RELATIONS AGREEMENT BILL 2000

MR HUMPHRIES (Treasurer, Attorney-General and Minister for Justice and Community Safety) (10.45): Mr Speaker, I present the Financial Relations Agreement Bill 2000, together with its explanatory memorandum.

Title read by Clerk.

MR HUMPHRIES: Mr Speaker, I move:

This is a Bill to implement certain measures to reform Commonwealth-State financial relations, as agreed by the Commonwealth and all States and Territories in June last year. The agreement, known as the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations, or IGA, is set out in the Schedule to the Bill. The IGA is part of the Commonwealth's national tax reform package, which includes introduction of a GST from 1 July 2000.

Mr Speaker, on 15 April 1999, following the Premiers Conference, the Chief Minister advised all members of this Assembly of the signing of the IGA. Then on 12 July 1999, following the release of the revised agreement and as required by the Administration (Interstate Agreements) Act 1997, the Chief Minister referred the signed IGA to all members by attaching a copy of the agreement to a letter of advice.

The agreement sets out those aspects of the Commonwealth tax reform package which directly impact on the States and Territories. Under the agreement, the major change in Commonwealth funding arrangements is that, commencing 1 July 2000, all of the GST revenue will be passed to the States and Territories, replacing financial assistance grants as the major component of Commonwealths grants.

The GST will also compensate for the cessation of a number of state and territory own-source taxes. In addition, States and Territories will fund a first home owners scheme. The Commonwealth undertook a commitment to ensure that the financial position of each State and Territory would be no worse off than under the current arrangements, with the Commonwealth funding any shortfall through guaranteed minimum amounts.

Mr Speaker, the Commonwealth has demonstrated its commitment to the agreement by its attachment of the agreement as a Schedule to the A New Tax System (Commonwealth-State Financial Arrangements) Act 1999. In the same manner, the States and Territories are to demonstrate their commitment by the attachment of the agreement as a Schedule to relevant state and territory legislation. This was seen as an appropriate way to secure endorsements for the state and territory parliaments.

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