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Commonwealth offer to the States and Territories, 1996 Premiers' Conference and Loan Council Meeting

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The Federal Government has today forwarded the Commonwealth's offer in respect of the 1996 Premiers' Conference and Loan Council Meeting to each of the States and Territories.

The Commonwealth Government wishes to provide maximum certainty as to the level of general revenue assistance to be provided to the States and Territories.

As a result the offer to the States and Territories is to maintain real per capita Financial Assistance Grants for 1996/97 and on a rolling three year basis.

Our current estimates total revenue assistance to the States will be around $16,396 million in 1996/97, an increase of 3.9 per cent on 1995/96, around $619 million.

Maintaining the level of general assistance is consistent with an attempt to increase flexibility and responsibility in the administration of State and Territory Governments.

The Coalition offer is made within the constraints reducing the underlying Budget deficit over the next 2 years by a total of $8 billion to achieve balance in 1997/98.

As a result, the offer of a real per capital guarantee is conditional on changes to exemptions from wholesale sales tax currently enjoyed by all tiers of Government (including the Commonwealth) which are described in a separate press release.

The Commonwealth is willing to discuss further the application of State and Commonwealth taxes to each other and will seek to do this in the context of ongoing discussions on transitional issues raised by the removal of the Government exemptions from wholesales tax.

Part of the Commonwealth offer also is also to maintain the schedule of Competition payments agreed at the 1995 COAG meeting as part of the Agreement to Implement the National Competition Policy (NCP) and Related Reforms. In accordance with the Agreement, the first tranche of the Competition Payments will be paid to eligible States and Territories in the first quarter of 1997/98.

The Commonwealth will require that the corresponding obligations of the States and Territories under the Agreement will be met in full. The Commonwealth places a high value on progressing the NCP and the related reforms in view of the substantial contribution they will make to increased productivity in the Australian economy and the achievement of sustained economic and employment growth.