Peter Costello

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Meeting of the Ministerial Council for Commonwealth-State Financial Relations and Outcome of Loan Council Meeting



Today's meeting of the Ministerial Council for Commonwealth-State Financial Relations noted that, on the basis of current estimates, States and Territories would receive:

  • total GST revenue of $29,425.1 million in 2002-03 and $31,020.0 million in 2003-04; and
  • total Budget Balancing Assistance (BBA) of $1,743.8 million in 2002-03 and $1,014.8 million in 2003-04.

2003-04 is the first year in which any jurisdiction will no longer require BBA. On the basis of the latest available estimates, Queensland, the ACT and the Northern Territory will not require BBA in 2003-04 because their GST revenue is in excess of the Guaranteed Minimum Amount (GMA).

GST Administration Issues

As the Australian Taxation Office (ATO) collects all GST revenue on behalf of the States and Territories, the Intergovernmental Agreement (IGA) provides that accountability and performance arrangements will be established between the State and Territory Governments and the ATO. The Ministerial Council endorsed a number of updates and amendments to the GST Administration Performance Agreement between the States and Territories and the ATO.

The Ministerial Council also discussed GST administration costs and related issues and agreed the ATO's GST administration budget for 2003-04, consistent with the requirement of the IGA that the States and Territories compensate the Commonwealth for the costs of administering the GST.

Specific Purpose Payments (SPPs)

On the basis of current preliminary estimates, total SPPs will increase by around 4.6 per cent, or $992.5 million in 2003-04. After abstracting from SPPs paid either direct to local government or which pass "through" the States to other bodies, SPPs "to" the States are estimated to increase by around 3.2 per cent, or $500.8 million. Detailed estimates of the proposed level of SPPs and their distribution among the States and Territories will be included in the Commonwealth's 2003-04 Budget.

National Competition Policy Payments

The Commonwealth will also provide National Competition Policy Payments of up to approximately $758.6 million to the States and Territories in 2003-04, as specified in the Agreement to Implement the National Competition Policy and Related Reforms.

Each jurisdiction's receipt of its per capita share of Competition Payments will be determined once the Commonwealth has considered recommendations from the National Competition Council's assessment of progress under the Agreement.

Total Commonwealth payments to the States

The Statement of Estimated Payments (Attachment A) includes current State-by-State estimates of the GMA, GST revenue and BBA (Tables 1, 2, 3, 4 and 7), General Revenue Assistance (Tables 7 and 12), SPPs (Tables 10 and 11) and total payments payable to the States and Territories in 2002-03 and 2003-04 (Table 12).

The distribution of GST revenues amongst the States will be in accordance with the final recommendation of the Commonwealth Grants Commission (CGC), which was released on 21 March 2003.

The Ministerial Council noted long term projections of the State-by-State impact of the reforms to Commonwealth-State financial relations (Attachment B). The projections are only indicative guides. The actual impact on each jurisdiction will be significantly affected by GST revenue growth and the CGC's final recommendations on the distribution of GST revenue.

Loan Council Allocations for 2003-04

Loan Council endorsed the Loan Council Allocations nominated by the Commonwealth and each State and Territory for 2003-04 (Attachment C).

Uniform Presentation Framework (UPF)

Loan Council agreed four proposals to further increase the transparency of the Uniform Presentation Framework (UPF). These proposals focus on disaggregating particular items within the UPF Operating Statement and adopting guidance on the publication of 'underlying' budget results in the UPF. These changes are to be included from 2002-03 Outcomes (Actuals) reports.

28 March 2003

Contact: Dave Alexander    Ph. 02 6277 7340




28 Mar 2003

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