Additional Special Revenue Assistance to the ACT for Education and Health
Since the advent of self-government in the ACT, the Commonwealth has provided Special Revenue Assistance in the form of 'transitional allowances' to compensate the Territory for the continuing impact of Commonwealth policies which were in place at the time of granting self government. It was always envisaged that the impact of these policies would decline over time (hence the financial compensation for them) as the Commonwealth policies were overtaken by ACT policy.
In determining the degree to which transitional funding could be phased out over time, it was decided that certain remnants of Commonwealth policies could be more easily be assimilated into the ACT than others. It was decided that some Commonwealth policy 'remnants' would be relatively easy to be overcome and compensation was paid for these only in the early years of self-government.
Currently, transitional funding is only paid for the effects of some of the more intractable problems. The most obvious of these is the question of the provision of a police force in the ACT. However, even in this case, it had been decided that a final payment to compensate for this function would occur in 1997-98, which would represent the end of transitional payments. Transitional funding for education and hospitals was due to expire in 1996-97, but the ACT Government requested the Commonwealth to re-examine this timetable. The ACT Government argued that the numerous changes in Territory government had made it difficult for programs to be quickly devised and implemented and that the magnitude of public sector reform made the task of achieving rapid adjustment difficult. The Grants Commission has therefore recommended that transitional funding for these functions should be extended until 1998-99.
Extension of the Real Per Capita Guarantee on Financial Assistance Grants to the States
At the 1994 Premiers' Conference, the Commonwealth stated that, in order to provide the States and Territories with more certainty in their future grants and to provide more generous funding arrangements, the provision of Financial Assistance Grants (FAGs) to the States and Territories would be subject to a rolling three-year guarantee that these grants would be escalated in line with the Consumer Price Index and the rate of population growth.
To date, this three-year real terms guarantee has been extended for a further year at each Premiers' Conference since 1994. The 1997 Premiers' Conference also agreed to the extension of this guarantee to the year 1999-2000. Since this guarantee will increase the FAGs base in the year 1999-2000, it will also be reflected in the forward estimate for 2000-01, whether or not the guarantee is subsequently extended to that year.
Partial Deferral of Fiscal Contributions from the ACT and Tasmania
In 1996-97, the Treasurer announced that the States and Territories would be required to make some contribution towards meeting the significant underlying Budget deficit identified by the Government. As a result, even though the States and Territories still receive their guaranteed FAGs, they have agreed to 'pay' a Fiscal Contribution back to the Commonwealth in each of the three years from 1996-97. The agreed amount to be paid by them in 1997-98 was to be $640 million.
The Fiscal Contributions which were to have been made by Tasmania and the ACT in 1997-98 are $16.3 million and $10.7 million respectively. However, in recognition of the difficult economic conditions facing these two jurisdictions, the 1997 Premiers' Conference agreed that they could defer one-half of their Fiscal Contributions until 1998-99. This will result in a cost to the Budget of $13.5 million in 1997-98, with this amount being recouped next year.
The significant decline in outlays for this program reflects completion of the planning and collection phases of the 1996 Census of Population and Housing and the near completion of the processing phase.
Increased Cost Recovery on the Sale of Products and Services
The Australian Bureau of Statistics is the sole organisation in Australia which is legally empowered to compel individuals and organisations to provide it with statistical information, without any compensation for the costs of compliance. As such, it has a government-protected monopoly role in the provision of national statistical data.
Over recent years, Commonwealth governments have adopted a policy of requiring the Australian Bureau of Statistics to increase charges for its statistical products and to provide more information on a fee for service, 'consultancy' basis to individual clients rather than including it in generally available publications.
The current Budget requires the Bureau to further increase its yield from the provision of products and services. As usual, any monies so raised will be returned to the Budget, since the Bureau's net running costs appropriation will be corresponding reduced.
Savings in Statistical Collections
Over recent years, the Australian Bureau of Statistics has significantly reduced the range of both collected and published data. The current Budget will continue this process. The savings measures include:
In addition to these measures, the savings shown in the above measures table also include changed arrangements for charging State authorities for their purchase of ABS products and services. Previously, the ABS reimbursed State authorities for such purchases. This Budget discontinues this practice.
More Time for Business
-Government's Small Business StatementBased on a recommendation of the Small Business Deregulation Task Force, a 'clearing house' will be established within the Australian Bureau of Statistics to evaluate and approve the collection of information from businesses. An initial scoping study will produce, as a by-product, a directory of statistical collections.
The measure also provides for a single registration point for the collection of information from businesses by government authorities at all levels of government. In the first instance, a single registration process will be introduced to meet the requirements of the Australian Taxation Office, the Australian Securities Commission, the Australian Bureau of Statistics and the Insurance and Superannuation Commission.
This measure will reduce duplication in collections and improve the quality and range of information collected.
Taxation administration involves a major web of activities in the Australian taxation system. The objectives of taxation administration are to collect efficiently and effectively the revenue properly payable in a fair and professional way, while ensuring that clients are aware of their obligations and their compliance costs are reduced. Taxation administration is central and crucial to many of the Budget measures and it is targeted by reference to five market segments:
Major Budget Measures
The 1997-98 Government's Budget Measures focus on:
Major Budget Measures which affect this program not mentioned above include:
Savings: Choice and Incentive
The Government seeks to encourage private saving and enhance Australia's retirement income system. It has formulated measures which provide an incentive to save, allowing individuals to choose the form most suited to their needs, and recognising that individuals need to save for life cycle needs as well as for retirement. The Government will make the superannuation system simpler and more flexible, offering individuals greater choice and control over their savings. Further details have been outlined in the Superannuation and Tax Rebate for savings briefing at the front of this section. On Budget night, the Treasurer issued a number of Press Releases (TPRs). TPR 40 Savings: Choice and Incentive provides an overview of the Government's savings and retirement incomes initiatives. These include:
Base Protection
The Government is committed to protecting the revenue base. Abuse of the tax system through minimisation and avoidance undermines both the equity and revenue base of the system. The Government is introducing measures which combine to make a major strategy to protect the revenue base and to ensure that the tax system continues to be made more efficient and equitable. The Government has advised that it will continue to take legislative action to close-off tax minimisation schemes as they are identified. In addition, the Australian Taxation Office (ATO) will continue to undertake extensive compliance enforcement work, including pursuing matters through the courts, to maintain the integrity of the tax system. Measures outlined and relevant Treasurer's Press Releases (TPRs) are as follows:
Withholding Tax Arrangements
From 1 July 1988, the Government has decided to change the timing of payment of income tax amounts withheld by business under the Pay-As-You-Earn, Prescribed Payments System and Reportable Payments System arrangements. This is considered by the Government to be a major change. The Government sees that this measure will improve the overall integrity of the tax system and provide compliance cost reductions for more than 300,000 small business. TPR 41 refers.
Modification of Tax Concessions
In addition to the measures detailed above which, in some cases, involve the modification of existing concessions in the tax system to protect the tax base, the Government has also sought to introduce a number of measures relating to new or existing tax expenditures. The Government has previously indicated that all tax expenditures will be subject to ongoing monitoring and evaluation to determine that they remain relevant to meeting the Government's priorities. These measures include:
Various other Budget Measures
Other measures announced in the budget which are the subject of separate press releases include:
The Child Support Agency assists the payment of Child Support between payer and payees for the benefit of children.
There are no specific Budget measures affecting this Sub-program.
The variation in estimates is accounted for by an increase in running costs through the net effect of price indexation, efficiency dividend, carryover and internal transfers, and an increase in base funding of property operating expenses. Also, workload adjustments are factored in for an increase in projected caseload and an increase in the formula agreed with the Department of Finance.
Corporate Support develops the corporate management process in the strategic and service areas and supports the efficient and effective operations of the ATO.
Corporate Support is comprised of four components including:
In regard to Budget Measures affecting this Sub-program, an extension of administrative funding has been allocated to the ATO to enable the rewriting of the income tax law to be completed by the Tax Law Improvement Project. There are also anticipated to be significant savings through efficiencies in corporate support. The Budget measures aim to reduce the ATOs expenditure by $10 million through the implementation of best practice benchmarking and improvements in personnel systems support.
The new regulatory arrangements affecting telecommunications from 1 July 1997 (the so-called 'deregulation' of the industry) will add to the Commission's range of responsibilities from that date. New regulatory arrangements also apply to gas although associated ACCC costs will be recovered from the gas industry from 1998-99.
The Insurance and Superannuation Commission (ISC) has a watchdog role and promotes public confidence in the Australian insurance and superannuation industries. Through a system of prudential supervision, the ISC protects the interests of policy holders-fund members while allowing the maximum practicable degree of commercial freedom and competition.
The Insurance and Superannuation Commission involves the following five Sub programs:
Budget measures involve funding decreases of $706 000 through savings in portfolio costs. Funds of $110 000 have been allocated to the Superannuation Program to contribute to the More Time for Business budget measures which is part of the Government's Small Business Statement.
The ISC will need to respond to any Government decisions arising from consideration of the Financial Systems Inquiry Report, but such response is expected to be handled within resources. Various changes resulting from amendments to the Life Insurance Act 1995 involving life industry procedures and public reporting are also expected to be handled within resources.
The reduction in running costs is largely accounted though fitout costs of $1.9 million for the ISC's new headquarters which were completed in 1996-97 and a reduction of $1.0 million for the community awareness program.
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