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Legislative Assembly for the ACT: 2000 Week 4 Hansard (28 March) . . Page.. 934 ..
MR HUMPHRIES (continuing):
prepared to recommend that it should happen, in effect - that the community organisations which are the recipients of grants or service provision arrangements from the ACT Government be fully compensated for the effect of the 10 per cent GST. When this issue was received by the committee, the Minister indicated that his expectation was that there would be simply an increase of 10 per cent in payments by not just DECS but other government departments to the community organisations from which they purchase services to allow the community organisations not to be disadvantaged by the payment of GST.
The effect of that would be a 10 per cent increase in payments by the community organisations and, because that is a cost and government is exempt from the payment of GST under the intergovernmental agreement, we will receive that extra cost back from the Commonwealth as a compensating payment under our guaranteed minimum amount arrangements. Under that arrangement, we can guarantee that the community organisations will be no worse off. The Minister foreshadowed that. Perhaps he did not make it absolutely definite, but it is clear that it will be the case that there will not be any adverse impact on the part of those organisations as a result of that.
But there is another issue here which the committee has not grappled with, perhaps because it has not asked the question. Not only will community organisations not have to meet the 10 per cent GST, but also there is the question of savings which those organisations will make from the embedded wholesale sales tax which they will no longer have to pay. The estimate that we have used in the ACT for the savings that community organisations will achieve as a result of that abolition of the embedded wholesale sales tax is approximately $1.2m across the whole of the government service provision sector - $1.2m.
The committee has not commented on whether the community organisations should have their 10 per cent adjustment reduced to account for the windfall which community organisations will actually receive. I am surprised about that. I am surprised that it has not been raised with the committee. Perhaps there is an explanation for that. Perhaps the committee did not have the issue brought to its attention. If that is the case, I will accept it. But the point I am trying to make is that there are two sides to this coin. There is the issue of extra costs if they were being forced to pay the GST, which, as I have indicated, they will not be forced to pay, in effect, and there is the question of the savings that they will make because wholesale sales tax is being abolished. I hope that the committee will consider that if it revisits these issues, for example, in the context of the estimates process. I will close by saying that I am disappointed by this report. The committee was given a clear task by the Assembly and it has failed completely to engage in that task.
MS TUCKER
(11.56), in reply: In closing the debate, I will address Mr Humphries' comments first. I need to correct a couple of things. I think he has misrepresented the report. First of all, Mr Humphries suggested that we had used time constraints as a reason for not meeting fully what the Government perceived to be our brief. We did not say that in the report. We did make a comment in the report about the timing issue, but we did not actually say that it was a factor in how we finally determined to present the report in terms of having recommendations dealing only with broad issues, which was how we worked within the spirit of the motion of the Assembly. On the issue of funding, we were put in the impossible situation of not being able to reshuffle money
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