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Legislative Assembly for the ACT: 2000 Week 6 Hansard (23 May) . . Page.. 1595 ..

MR HUMPHRIES (continuing):

The bill also constrains the power to make legislative changes so that the executive may not amend key pieces of legislation such as the Financial Management Act or the Auditor-General's Act. Lastly, this provision will only operate from 1 July 2000 for a period not longer than four months or six sitting days. This timing will allow for the executive to make regulations until such time as the sitting pattern allows for the introduction and debate of any substantive legislation that might be required.

The second substantive provision of the Goods and Services Tax (Temporary Transitional Provisions) Bill 2000 will enable the net effect of any GST related increases in prices to be passed on. This will give effect to the underlying rationale of the GST legislation. This provision will allow prices set by legislation to increase for the impact of GST without the need for legislative amendment.

This provision will not apply to the determination of fees or charges under legislation. Nor will it permit prices set under a contract to change except in accordance with the contract. This provision is required to overcome difficulties that have emerged in other jurisdictions and the ACT caused by legislation that imposes or sets a ceiling on prices.

The second bill I am introducing today, the Financial Management Amendment Bill, provides for amendments to the Financial Management Act 1996. The major amendments in this bill again relate to the implementation of the GST.

With the introduction of the GST, agencies will have to pay tax on the purchase of goods and services. In almost all cases departments will be able to claim this tax back as GST input tax credits from the Australian Taxation Office. At the moment the FMA does not enable agencies to spend GST input tax credits received from the ATO as reimbursement of GST paid on the purchase of goods and services. It is therefore necessary to extend the concept of net appropriations to give effect to the underlying rationale of the GST legislation.

This bill therefore expands the concept of net appropriations for outputs to allow departments to apply the value of input tax credits to pay the expenses and liabilities incurred in providing outputs. The wording used to describe net appropriations for outputs has also been amended to clarify its operation, and the operation of zero appropriations is clarified.

The bill also allows for a limited net appropriation to apply to capital injection appropriations. This will allow agencies to apply the value of input tax credits to pay the expenses and liabilities incurred in purchasing or developing assets.

Secondly, as part of the implementation of the GST, agencies will be responsible for collecting GST on some of their revenue items and for paying these amounts to the ATO. In this respect, the territory could be described as a GST collection agent on behalf of the ATO. The territory will have no discretion over the amount or payment of these amounts. The bill therefore inserts a provision into the FMA to enable the territory to pay the ATO GST revenue collected whether or not there is an appropriation.

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