National Competition Policy Payments
The Australian Government makes National Competition Policy Payments (NCPPs) to the states for implementing National Competition Policy (NCP) and related reforms. These reforms include a commitment to review legislation that restricts competition, apply competitive neutrality to government business activities and introduce specific reforms in electricity, gas, water and road transport.
NCPPs commenced in July 1997 with the first of three tranches of payments. The third tranche commenced in July 2001 at an annual level of $600 million in 1994-95 prices. The NCP agreements, signed by the Australian Government and all state governments in 1995, provide for the Australian Government to make NCPPs to state governments up to and including 2005-06. The future of NCPPs beyond 2005-06 is under review. A Council of Australian Governments’ review of the terms and operation of the NCP agreements, including an assessment of the future of NCPPs, is scheduled to be completed in 2005.
Each state’s NCPPs are subject to that state making satisfactory progress with the implementation of reform commitments. Prior to the scheduled payment of NCPPs in each year, the National Competition Council (NCC) assesses whether each state has met the specified conditions and provides recommendations for consideration by the Australian Government.
Out of an estimated maximum level of payments in 2004-05 of $777.9 million, the NCC recommended permanent deductions currently estimated to be worth $26.3 million and suspensions currently estimated to be worth $114.1 million. The NCC has indicated that it will recommend that suspensions be lifted or reduced and suspended monies released if and when states sufficiently progress reform.
Table 15 shows estimates of NCPPs for 2004-05 and 2005-06. Each state’s amount for 2004-05 reflects reimbursements for 2003-04 suspensions, permanent deductions for 2004‑05 and suspensions for 2004-05 as recommended by the NCC. The amounts reported below for 2005-06 are the current estimates of each state’s maximum level of payment (that is, if no reimbursements, permanent deductions or suspensions apply).
Table 15: National Competition Policy Payments
