Bills Digest no. 104 2008–09
Federal Financial Relations (Consequential Amendments
and Transitional Provisions) Bill 2009
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Federal Financial Relations (Consequential
Amendments and Transitional Provisions) Bill
2009
Date
introduced: 12
February 2009
House:
House of Representatives
Portfolio:
Treasury
Commencement:
Various dates as set out
in the table in clause 2
Links: The relevant
links to the Bill, Explanatory Memorandum and second reading
speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
To implement consequential
amendments to various Acts pursuant to the introduction of the
Federal Financial Relations Bill 2009, and to provide for the
appropriation of an additional $500 million under the Health
Care (Appropriation) Act 1998 before that Act is repealed.
The Howard Government implemented major reforms to
Commonwealth-state financial relations. These reforms are contained
in the
Intergovernmental Agreement on the Reform of
Commonwealth–State Financial Relations. This is
incorporated—as Schedule 2—into
A New Tax System (Commonwealth–State Financial Relations)
Act 1999. (Schedule 1 of this Act contains
the transitional provisions that were introduced when the Howard
Government’s reforms were implemented).
In November 2008, the Council of Australian Governments (COAG)
agreed to major reforms to Commonwealth–State financial
relations. The COAG reforms change, to a considerable extent,
existing arrangements. (The COAG reforms are discussed in the Bills
Digest for the Federal Financial Relations Bill 2009).
However, the COAG reforms continue virtually all of the
arrangements for the distribution among the states of the revenue
from the goods and services tax (GST). The Federal Financial
Relations Bill 2009 incorporates the COAG arrangements for the GST.
It is therefore necessary to amend the A New Tax System
(Commonwealth–State Financial Relations) Act 1999 (and
other Acts) and introduce transitional arrangements. The Federal
Financial Relations (Consequential Amendments and Transitional
Provisions) Bill 2009—the Bill—does both. In
particular, the Howard Government’s arrangements for the GST
expire on 30 June 2009. The amendments in this Bill to the A
New Tax System (Commonwealth–State Financial Relations) Act
1999 therefore come into effect on 1 July 2009.
The Bill repeals Schedules 1 and 2 of the A New Tax System
(Commonwealth–State Financial Relations) Act 1999.
Following the repeal of these two Schedules, the rump of this Act
will deal thereafter only with the rate of GST and the maintenance
of its base.
The Bill also appropriates $500 million for expenditure under
the
Health Care (Appropriation) Act 1998. This is
additional base funding for health to be paid in 2008–09.
Under the new National Healthcare Agreement agreed by COAG on 28
November 2008, the states and territories will be paid an
additional $500 million in base funding for five years, beginning
in 2008–09.[1]
The Bill repeals the Health Care (Appropriation) Act
1998 and future arrangements for health care funding will be
governed by the Federal Financial Relations Bill 2009.
The Bill appropriates $500 million for expenditure under the
Health Care (Appropriation) Act 1998 for use under the
COAG healthcare arrangements.
Item 1 changes the title of the A New Tax
System (Commonwealth–State Financial Relations) Act 1999
to the A New Tax System (Managing the GST Rate and Base) Act
1999.
Item 2 changes the outline of the A New Tax
System (Commonwealth–State Financial Relations) Act 1999
to read ‘This Act deals with circumstances in which the rate
of the GST and the GST base can be altered’.
Items 3 to 17 inclusive repeal
redundant definitions in the A New Tax System
(Commonwealth–State Financial Relations) Act 1999, that
is, those not relevant to the GST rate and base maintenance.
Item 20 repeals Schedules 1 and 2 of the A
New Tax System (Commonwealth–State Financial Relations) Act
1999.
Item 5 has the effect of increasing the amount
that can be appropriated under the Health Care (Appropriation)
Act 1998 by $500 million.
Item 7 amends the
Interstate Road Transport Act 1985.This is
one of several Acts under which the Commonwealth implements the
Federal Interstate Registration Scheme (FIRS). Under the FIRS, the
Commonwealth collects registration fees on trucks operating
interstate and passes the revenue to the states. The states spend
the money on road maintenance. The effect of item
7 is to ensure that once the Minister has ascertained how
much FIRS revenue has been collected, the amount must be credited
to the COAG Reform Fund, and the Treasurer must ensure that the
money is paid as soon as practicable.
The Commonwealth and Western Australia share taxes on petroleum
produced offshore. The Commonwealth collects the revenue and pays
Western Australia’s share to that state. The effect of
item 11 is to ensure that the Treasurer credits to
the COAG Reform Fund Western Australia’s share of the revenue
collected under the Offshore Petroleum and Greenhouse Gas
Storage Act 2006, and pays the money to Western Australia as
soon as practicable.
Item 1 repeals the Health Care
(Appropriation) Act 1998 with effect from 1 July 2009.
As noted, the Howard Government’s arrangements for the GST
expire on 30 June 2009. Item 1 ensures that is the
provisions of the A New Tax System (Commonwealth–State
Financial Relations) Act 1999 remain in force for
2008–09 despite the amendments to this Act contained in the
Bill.
Under current law, the Commissioner of Taxation estimates GST
receipts for a financial year and payments are based on this
estimate. When actual receipts are known, an adjustment is made in
the following financial year to ensure that each state receives its
correct entitlement. Item 2 deals with
overpayments and underpayments for the 2008‑09 GST year.
Subitem 2(1) provides that where a state has been
overpaid in 2008–09, the Minister must deduct an equal amount
from any financial assistance that the state is entitled to
receive, under section 5 of the Federal Financial
Relations Act 2009, for the financial year starting on
1 July 2009.
Conversely, subitem 2(2) provides that if a
state has been paid less than its GST entitlement in 2008–09,
the Minister must add an amount equal to the shortfall to any
amount that the state is entitled to receive by way of financial
assistance under section 5 of the Federal Financial
Relations Act 2009 for the financial year starting on
1 July 2009.
Subitem 2(3) provides that payments made under
subitem 2(2) are to be made out of the
Consolidated Revenue Fund, which is appropriated accordingly.
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277
2464.
Richard Webb
26 February 2009
Bills Digest Service
Parliamentary Library
© Commonwealth of Australia
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