Senate

Revised Supplementary Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 1 - Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations

Overview

1.1 The proposed amendments create a new part (Part 1A) of the Bill which adds a schedule (Schedule 2) comprising the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations and also records the intention of the Commonwealth to comply with the Intergovernmental Agreement.

Summary of the amendment

Purpose of the amendment

1.2 To fulfil the Government's commitments under clause 4 of the Intergovernmental Agreement.

Date of effect

1.3 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 Act Administration) Act 1999 have commenced. The Intergovernmental Agreement between the Commonwealth, the States and the Territories will commence on 1 July 1999 unless otherwise agreed by the Parties.

Background to the amendment

1.4 At the 9 April 1999 Premiers' Conference, the Prime Minister and the Premiers and Chief Ministers of each State and Territory signed an Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations . The Intergovernmental Agreement sets out Commonwealth, State and Territory commitments with respect to new Commonwealth-State financial arrangements.

1.5 In clause 4 of the Intergovernmental Agreement the Commonwealth undertook to attach the Intergovernmental Agreement to the A New Tax System (Commonwealth-State Financial Arrangements) Act 1999 and to use its best endeavours to ensure the Act will require compliance with the Intergovernmental Agreement. The States and Territories made a similar undertaking in relation to their legislation.

1.6 The 9 April 1999 Intergovernmental Agreement was subsequently amended to reflect changes to the taxation reform package announced by the Prime Minister on 28 May 1999. The amended version of the Intergovernmental Agreement is included at Schedule 2.

Explanation of the legislation

1.7 Sub-clause 9A(1) provides that a copy of the Intergovernmental Agreement is attached to the Act.

1.8 Sub-clause 9A(2) records that it is the Commonwealth's intention to comply with, and give effect to, the Intergovernmental Agreement.