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1998-1999-2000
THE
PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF
REPRESENTATIVES
LOCAL GOVERNMENT (FINANCIAL ASSISTANCE)
AMENDMENT BILL 2000
(Circulated
by authority of the Minister for Regional Services, Territories and Local
Government, the Senator the Honourable Ian Macdonald)
ISBN: 0064 243568
LOCAL GOVERNMENT (FINANCIAL ASSISTANCE) AMENDMENT BILL
2000
The Local Government (Financial Assistance) Amendment Bill
2000 makes tax reform related amendments and procedural amendments to the
Local Government (Financial Assistance) Act 1995.
Section 8 of the Local Government (Financial Assistance) Act 1995
specifies the formula to be applied by the Treasurer each year to determine the
increase in the level of local government financial assistance grants. The
formula is based on the annual increase in States’ financial assistance
grants and special revenue assistance. Since 1994–95 the State grants, and
hence grants to local government, have generally increased annually in line with
population and CPI movements.
The Act is amended to remove the nexus
between the local government financial assistance grants and States’
financial assistance grants, as the latter are to be abolished from 1 July 2000
under the terms of the Intergovernmental Agreement on the Reform of
Commonwealth-State Financial Relations (the Agreement).
The amendment
continues the escalation factor for local government financial assistance on a
real per capita basis from previous year grants. As with the existing
provisions, the amendments provide the Treasurer with discretion to increase or
decrease the escalation factor in special circumstances.
The Act is also
amended to implement the Commonwealth’s undertaking in clause 18 of the
Agreement. The amendment will require the States and the Northern Territory to
withhold from any local government authority in breach of clause 17 of the
Agreement, a sum representing the amount of any unpaid voluntary or notional GST
payments, from their financial assistance grant. Amounts withheld by the States
and the Northern Territory are to be paid to the Commonwealth.
The Act is amended to remove the requirement that the Minister and
Statistician must agree to the assumptions used in projecting the population of
the States and of Australia. This is to be replaced with a requirement that the
Statistician provide estimates on the basis of assumptions specified by the
Minister after consulting the Statistician.
Various definitions regarding
projected populations, used in calculating the escalation factor, are also to be
amended to reflect this change.
The Local Government (Financial Assistance) Act 1995 is the basis
upon which Commonwealth financial assistance is provided to local government
through the States and Territories. This financial assistance has two
components:
§ general purpose funding (section 9
payments); and
§ local roads funding (section 12
payments).
Under this Act local government is expected to be entitled to
receive around $1.32 billion in financial assistance grants in 2000–01.
Each year, the Treasurer determines the escalation of local government
assistance by having regard to movements in the level of the financial
assistance grants and special revenue assistance paid to the
States.
Under the terms of the Agreement, the Commonwealth retains
responsibility for providing financial assistance grants to local government.
Subject to adjustment by the Treasurer in special circumstances, these
amendments will maintain the growth of these grants on a real per capita
basis.
Under clause 18 of the Agreement, the Commonwealth has
agreed to legislate to require the States and the Northern Territory to withhold
from any local government authority that does not pay voluntary or notional GST
payments, a sum representing the amount of unpaid voluntary or notional GST
payments. Amounts withheld will form part of the GST revenue pool which will be
distributed to the States.
Local Government (Financial Assistance) Amendment Bill
2000
This clause specifies the Short Title of the Act as the Local
Government (Financial Assistance) Amendment Act 2000.
This clause provides that the Act commences on the day on which it
receives the Royal Assent.
Clause 3 –
Schedule(s)
This clause provides for the Act to be amended or
repealed according to the terms set out in the Schedule, and that any other
items in a Schedule to the Act will have effect according to their
terms.
Schedule 1 – Amendment of the Local Government
(Financial Assistance) Act 1995
Subsection 4A(1) provides new definitions for the terms “population
of a State” and “population of Australia” to be used when
causing an escalation factor to be calculated under subsection 8(1) and when
applying section 10 in respect of the current year mentioned in that
section.
Subsection 4A(2) requires the Statistician when making a population
estimate to have regard to the latest statistics in relation to population
available on the day the estimate is made.
Subsection 4A(3) requires the
Minister to, as soon as practicable after receiving population estimates from
the Statistician, provide the Treasurer of each State a written notice setting
out the population of the State and the total population of all
States.
Subsections 4A(2) and (3) are similar to the current subsections
10(2) and (3) which are being repealed. (see clause 13)
Inserted subsection 6(8) ensures that where there is a possibility of a
reduction in the amount to be allocated to a local governing body when complying
with section 15 (aa), then the amount withheld cannot be taken into account by
the State when determining the allocation to be made to the local
authority.
Clause 3 – After subsection
7(3)
Subsection 7(3A) requires the Treasurer when making estimates
regarding Australia’s population to consult the
Statistician.
Clause 4 – Paragraph 8(1)(a)
The
amended paragraph provides the formula to be used to calculate the escalation
factor for increasing local government financial assistance on a real per capita
basis.
Clause 5 – At the end of subsection 8(1)
The
new paragraph (c) gives the Treasurer discretion, where he considers there are
special circumstances, and subject to subsection 8(2), to increase or decrease
the factor obtained under paragraph (a), by such amount as he considers
appropriate. This discretion to adjust the factor is currently included in the
formula in paragraph 8(1)(a) of the Act.
Clause 6 – After
subsection 8(1)
Subsection 8(1A) requires that where the reference
base for an index number is changed, then only index numbers published in terms
of the new base are to be used after the change has been made. This allows the
current year to be compared with the previous year on a comparable basis where a
change has been made to the index reference base.
Clause 7 –
Subsection 8(2)
The amendment replaces the reference to repealed
paragraph 1(a) with the new paragraph 1(c).
This amendment repeals some of the existing factors the Treasurer must
have regard to when calculating the escalation factor. These matters will be
nullified by reforms to Commonwealth-State financial relations under the
Agreement. The new paragraph 8(2)(a) replaces these factors with a requirement
for the Treasurer to consider the objects of the Act in section
3.
Clause 9 – Subsection 9(1) (definition of Projected
population of the State)
The amendment to this definition removes
the requirement for the Minister and Statistician to agree on assumptions used
in estimating population, and replaces this with a requirement for estimates to
be made by the Statistician on the basis of assumptions specified by the
Minister after consulting the Statistician.
Clause 10 –
Subsection 9(1) (definition of Projected population of
Australia)
The amendment to this definition removes the
requirement for the Minister and Statistician to agree on assumptions used in
estimating population, and replaces this with a requirement for estimates to be
made by the Statistician on the basis of assumptions specified by the Minister
after consulting the Statistician.
Clause 11 – Subsection 10(1)
(definition of Projected population of the State)
This
definition is to be repealed and replaced by a new definition in paragraph
4A(1)(c).
This definition is to be repealed and replaced by the new definition in
paragraph 4A(1)(d).
Clause 13 – Subsection 10(2) and
(3)
These two subsections are repealed and similar wording is
included in the new subsections 4A(2) and 4A(3).
Subsection 11(3) provides that any withholding of financial assistance
under paragraph 15(aa) is not to be taken into account by State Grants
Commissions when making allocations to local government under section 9.
Subsection 14(3) provides that any withholding of financial assistance
under paragraph 15(aa) is not to be taken into account by State Grants
Commissions when making allocations to local government under section
12.
Clause 16 – Paragraph 15(a)
The amendment to this
paragraph makes reference to the extra condition under paragraph 15(aa) which
the States are subject to when receiving financial assistance grants, to
withhold financial assistance grants from local government authorities to the
value of unpaid notional or voluntary GST amounts.
Clause 17 –
After paragraph 15(a)
The new paragraph 15(aa) requires the States
and the Northern Territory to withhold financial assistance grants from local
government authorities of an amount that represents voluntary GST payments that
should have, but have not been paid, by the bodies. The amount withheld is to be
paid to the Commonwealth.
This amendment includes paragraph 15(aa) as one of the matters to be
considered by the Minister when determining if, under paragraph 15(c), he
requires the States to repay to the Commonwealth any amounts they have
received.
This clause provides that the amendments contained in this Bill apply
where the year mentioned in definitions, population estimates and payment
clauses is the year beginning on 1 July 2000 or any later year. Amendments
relating to the withholding of voluntary GST amounts apply to the year beginning
1 July 2001 or any later year.
Where a factor is calculated under subsection 8(1) of the amended Act in
relation to a year beginning on 1 July 2000, the definition of
“previous population of Australia” is to be replaced by a
definition relating population to the year beginning on 1 July 1999.