CHAPTER III: COMMONWEALTH PAYMENTS TO THE STATES AND TERRITORIES

This chapter discusses trends in Commonwealth payments to the States and outlines the arrangements for payments to the States and local government in 1996-97 and 1997-98.

Table 5 shows estimated Commonwealth total payments to the States through the forward estimates period after allowing for the fiscal contributions which the States have agreed to make to the Commonwealth and some large one-off payments in 1996-97 and 1997-98.

Total payments to the States are estimated to be $34.1 billion in 1997-98. General purpose payments are expected to account for around 47 per cent of payments to the States and SPPs for around 53 per cent.
Total payments are forecast to increase in both nominal and real terms by around 11 per cent and 2 per cent, respectively, over the forward estimates period to 2000-01.

Table 5: Commonwealth Payments to the States, 1996-97 to 2000-01 ($million, estimated)

(a) Data exclude SPPs direct to local government authorities, deductions for State fiscal contributions ($142 million in 1996-97) and very large SPPs for the Guns Buyback Scheme ($329 million in 1996-97 and $167 million in 1997-98) and the Petroleum Resource Rent Tax agreement with Victoria ($556 million in 1996-97).

(b) States' fiscal contributions agreed at the 1997 Premiers' Conference.

Table 6 shows estimated total net Commonwealth payments to the States in 1997-98. The data are also shown for each State and in per capita terms and include SPPs made directly to local government authorities. After allowing for the States' fiscal contributions, total net payments to the States and local government authorities are expected to be around $33.5 billion in 1997-98, an increase of $392 million or 1.2 per cent on 1996-97.

Repayments to the Commonwealth by the States will amount to around $887 million in 1997-98. Around 86 per cent of total repayments are expected to be accounted for by the States' contributions to the Debt Retirement Reserve Trust Account to allow the redemption of amounts borrowed on their behalf by the Commonwealth in previous years. Other significant debt repayments in 1997-98 are related to the Commonwealth-State Housing Agreement.

Table 6: Total Net Commonwealth Payments to the States and Local Government Authorities, 1997-98 (estimated)

(a) Data exclude SPPs direct to local government authorities and SPPs for the Guns Buyback Scheme ($167 million in 1997-98).

(b) Payments 'through' are payments which are made to the States to be passed on to local government, other bodies and individuals.

(c) Per capita figures are based on projections of population as at 31 December 1997, prepared by the ABS on the basis of assumptions agreed to by the Treasury.