The States and Territories will make fiscal contribution payments of $627 million in 1997-98. These payments will be made in accordance with the schedule agreed at the 1996 Premiers' Conference except for Tasmania and the Australian Capital Territory. In recognition of the difficult economic circumstances facing Tasmania and the Australian Capital Territory, it was agreed that they will defer the payment of half of their scheduled fiscal contributions of $16.3 million and $10.7 million, respectively, until 1998-99. The need for the revised fiscal contribution of $313 million in 1998-99 will be reviewed at the 1998 Premiers' Conference in the light of developments in the Commonwealth's fiscal position.
The Commonwealth reaffirmed its commitment to make National Competition Payments (NCPs) to the States as specified in the National Competition Policy Agreement. Competition Payments of up to $215.1 million will be made in 1997-98 and will be determined after the National Competition Council reports in June 1997. These payments, like the per capita component of the guarantee for FAGs, are conditional on the States achieving satisfactory progress in the implementation of National Competition Policy reforms.
The Commonwealth also indicated that the likely reduction in the aggregate level of specific purpose payments (SPPs) to the States, that was currently being contemplated as part of the budget process, would be a maximum of 1.3 per cent against the forward estimates in 1997-98. (The actual reduction will be around 0.5 per cent.)
Other key outcomes from the 1997 Premiers' Conference were as follows:
Estimates of general revenue assistance to be provided to the States in 1996-97 and 1997-98 are shown in Table 2.
Table 2: General Revenue Assistance to the States, 1996-97 and 1997-98 (estimated)
(b) Medicare guarantee payments (MCG).
(c) For 1996-97, these consist of the additional payments agreed at the 1996 Premiers' Conference. The $9.9 million to the NT is funded from the FAGs pool. The $42.2 million to the ACT is for transitional allowances and special fiscal needs, which are funded by the Commonwealth. In 1997-98, the ACT will receive $34.5 million in transitional allowances and special fiscal needs, funded by the Commonwealth.
(d) Identified road grants are to be absorbed into the FAGs pool in 1997-98.
(e) The Agreement to Implement the National Competition Policy and Related Reforms specifies that $200 million in 1994-95 prices is to be distributed between the States on an equal per capita basis in 1997-98. The receipt of the payment is conditional on a State meeting the obligations of the Agreement.
(f) Estimated distribution based on arrangements agreed at the 1996 and 1997 Premiers' Conferences involving equal per capita contributions but with the deferral of half of Tasmania's and the ACT's 1997-98 contribution to 1998-99.