2001-02 BUDGET PAPER No. 3

FEDERAL
FINANCIAL RELATIONS
2001-02

CIRCULATED BY
THE HONOURABLE PETER COSTELLO, M.P.,
TREASURER OF THE COMMONWEALTH OF AUSTRALIA, AND
THE HONOURABLE JOHN FAHEY, M.P.,
MINISTER FOR FINANCE AND ADMINISTRATION
FOR THE INFORMATION OF HONOURABLE MEMBERS
ON THE OCCASION OF THE BUDGET 2001-02

22 MAY 2001

 Commonwealth of Australia 2001
ISBN 064226193-8
This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth available from Info Products. Requests and inquiries concerning reproduction and rights should be addressed to the Manager, Legislative Services, Info Products, Department of Finance and Administration, GPO Box 1920, Canberra ACT 2601.

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Contents
Preface	vi
Chapter 1:  Overview and Recent Developments	1
Overview of Commonwealth‑State financial relations	1
GST revenue provision and Commonwealth payments to the State/local sector	2
Key developments since the 2000‑01 Budget	6
Chapter 2:  GST Revenue Provision and Commonwealth Payments of General Revenue Assistance to the States and Territories	7
Provision of GST revenue to the States and Territories in 2000‑01 and 2001‑02	7
General revenue assistance	10
Revenue replacement payments under ‘safety net’ arrangements, and mirror taxes	14
Horizontal fiscal equalisation	16
Chapter 3:  Specific Purpose Payments, and General Purpose Assistance to Local Government	21
Specific Purpose Payments	21
General purpose assistance to local government	23
Chapter 4:  Fiscal Developments in the States and Territories and Loan Council Arrangements	27
Fiscal developments in the States and Territories	27
The Australian Loan Council	32
Appendix A:  GST Revenue	37
GST revenue	37
GST measures	38
Appendix B:  Commonwealth Specific Purpose Payments to Other Levels of Government, Repayments of Advances, Advances and Interest Payments	43
Appendix C:  Parameter Estimates  and Further Information	98
Parameter estimates used in this Paper	98
Further information	99
Index	101

List of tables
Table 1:	GST revenue provision and total Commonwealth payments to the State/local sector, 2000‑01	4
Table 2:	GST revenue provision and total Commonwealth payments to the State/local sector, 2001‑02	5
Table 3:	Distribution of GST revenue, 2000‑01	8
Table 4:	Distribution of GST revenue, 2001‑02	9
Table 5:	Guaranteed Minimum Amount components, GST revenue provision and Budget Balancing Assistance, 2000‑01	11
Table 6:	Guaranteed Minimum Amount components, GST revenue provision and Budget Balancing Assistance, 2001‑02	12
Table 7:	National Competition Policy Payments, 2000‑01 to 2004‑05	13
Table 8:	Special Revenue Assistance to the Australian Capital Territory, 2000‑01 to 2004‑05	14
Table 9:	Revenue replacement payments, 2000‑01	15
Table 10:	‘Safety net’ surcharge collections and accrued mirror taxes on behalf of the States, 2000‑01 to 2004‑05	16
Table 11:	GST relativities and Financial Assistance Grants relativities, 2000‑01 and 2001‑02	19
Table 12:	Effect of horizontal fiscal equalisation, 2001‑02	19
Table 13:	General purpose assistance to local government, 2000‑01 and 2001‑02	25
Table 14:	Loan Council Allocations — 2001‑02 nominations 	34
Table 15:	Commonwealth budget time Loan Council Allocation for 2001‑02	35
Table A1:	Reconciliation of GST cash revenue	37
Table A2:	GST revenue measures since the 2000‑01 Budget	38
Table B1:	Estimated Specific Purpose Payments to the States, repayments of advances, advances and interest payments, 2000‑01 to 2004‑05	44
Table B2:	Estimated Specific Purpose Payments to the States, repayments of advances, advances and interest payments, 2000-01	72
Table B3:	Estimated Specific Purpose Payments to the States, repayments of advances, advances and interest payments, 2001-02	83
Table B4:	Estimated Specific Purpose Payments direct to local government authorities, 2000-01 to 2004-05	95
Table B5:	Estimated Specific Purpose Payments direct to local government authorities, 2000-01	96
Table B6:	Estimated Specific Purpose Payments direct to local government authorities, 2001-02	97
Table C1:	Population by State	98
Table C2:	Parameters	98

List of Charts
Chart 1:	GST revenue provision to the States, 2001‑02	2
Chart 2:	Commonwealth payments to the State/local sector, 2001‑02	3
Chart 3:	Specific Purpose Payments to the States, 1981‑82 to 2001‑02	22
Chart 4:	Composition of estimated Specific Purpose Payments ‘to’ and ‘through’ the States, 2001‑02	23
Chart 5:	State cash surplus by sector	28
Chart 6:	State non-financial public sector net debt 	29

Preface
This Budget Paper presents information on the Commonwealth Government’s financial relations with State, Territory and local governments.
Relationship with other Budget Papers and terminology
Budget Paper No. 3 is one of a series of Budget Papers, the purpose of which is to provide information supplementary to that in the Budget Speech. A full list of the series is printed on the inside cover of this Paper.
Chapter 4 of this Paper examines budget trends in the States and Territories. This is intended to provide an overview of fiscal developments in the States and Territories and supplement information provided in Statement 8 of Budget Paper No. 1.
Style conventions
The following style conventions are employed in this Paper.
•	The Australian Capital Territory and the Northern Territory are referred to as ‘the Territories’. References to the ‘States’ or ‘each State’ include the Territories.
•	The State and local government sector is denoted as the ‘State/local sector’. References to the ‘State/local sector’ include the Territories unless otherwise stated.
•	Figures in tables, and generally in the text, have been rounded. Discrepancies in tables between totals and sums of components reflect rounding. Percentage changes in tables are based on the underlying unrounded amounts.
•	The following notations are used in the tables.
na	not applicable
0	zero
-	nil
$m	$ million