Explanatory Memorandum
(Circulated by authority of the Minister for Regional Services, Territories and Local Government, Senator the Hon. Ian Macdonald)OUTLINE
The Bill gives effect to aspects of changes to the payment of financial assistance grants to the States and Territories, and to local government announced in A New Tax System . Under A New Tax System , the States and Territories will receive GST revenue from the Commonwealth instead of financial assistance grants and will take over responsibility for funding financial assistance to local government.
The Bill amends and repeals the Local Government (Financial Assistance) Act 1995 and repeals the States Grants (General Purposes) Act 1994 .
Amendments to and repeal of the Local Government (Financial Assistance) Act 1995
The Local Government (Financial Assistance) Act 1995 is repealed with effect from the commencement of the A New Tax System (Commonwealth-State Financial Arrangements) Act 1999 .
Some transitional arrangements are specified. Reporting on the operation of the Act during 1999-2000 will be required. Also, some conditions applying to payments to a State made under the Act in respect of 1999-2000 will continue to apply after the Act is repealed.
The amendments to the Local Government (Financial Assistance) Act 1995 modify the payment of grants to local government during the May quarter 2000. These amendments are required because of the mechanism used to pay these grants through the States to local government. Currently, the grant for each financial year is calculated on the basis of an estimate with an adjustment made to the grant payments in the following financial year when the actual amount of the grant is known.
Under the amendments to the Act, the Commonwealth will finalise payments to the States in respect of local government grants for 1999-2000 during the May quarter 2000. Instead of one quarterly payment in May, there will be three monthly grant payments. An adjustment will be made to the June 2000 payment that reflects the difference between the estimated grant and the actual grant for 1999-2000.
Repeal of the State Grants (General Purposes) Act 1994
The whole of the State Grants (General Purposes) Act 1994 is repealed with effect from the commencement of the A New Tax System (Commonwealth-State Financial Arrangements) Act 1999 .
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