Supplementary Explanatory Memorandum
Chapter 3 - Transitional arrangements
Overview
3.1 The proposed amendments to Schedule 1 of the Bill provide for the distribution of GST revenue grants in accordance with the principle of horizontal fiscal equalisation after 2001-02.
Summary of the amendment
3.2 To reflect the terms of the Intergovernmental Agreement in relation to transitional arrangements.
3.3 Clause 2 of the Bill provides that this Bill, once enacted, will commence when it has received royal assent or after the A New Tax System (Goods and Services Tax) Act 1999 ; the GST imposition Acts; and the A New Tax System (Goods and Services Tax Administration) Act 1999 have commenced, whichever is later. The Intergovernmental Agreement will commence between the Commonwealth, States and the Territories on 1 July 1999 unless otherwise agreed by the Parties.
Background to the amendment
3.4 At the 1999 Premiers' Conference it was agreed that the transitional arrangements agreed at the November 1998 Special Premiers' Conference and subsequently proposed in Schedule 1 to the Bill should be amended. The agreement reached by all Parties and reflected in the Intergovernmental Agreement was that the distribution of GST revenue grants should be solely on the basis of horizontal fiscal equalisation after 2001-02 rather than 2002-03.
Explanation of the amendment
3.5 Amendments are made to clauses 4, 5 and 6 of Schedule 1 of the Bill to provide that the distribution of GST revenue grants will be in accordance with the horizontal fiscal equalisation in each year after 2001-02. Under clause 6(2) of Schedule 1 of the Bill, a State or Territory will continue to receive an amount of transitional assistance if this is necessary to ensure that the State or Territory budget is no worse off during the transition period than it would have been in the absence of the reforms.