Attachment A: Historical payments to the States and Territories1
Total payments to the States have grown steadily since the introduction of The New Tax System in 2000‑01 (Chart 2). The average annual increase in total payments over this seven year period has been 6.5 per cent.
Chart 2: Total payments to the States since 1993-94(a)
- There is a break in the series between 1998-99 and 1999-00. Data prior to 1999-00 are on a cash basis and data from 1999-00 are on an accrual basis.
Payments to the States for the seven years since the introduction of The New Tax System have averaged 6.8 per cent of GDP, compared with the average of 6.7 per cent for the past 14 years. In 2006-07, total payments were 6.5 per cent of GDP (Table 36), slightly lower than the average, as a result of:
- no general revenue assistance being paid, principally due to the cessation of National Competition Policy payments (refer page 59) and no budget balancing assistance being payable; and
- strong growth in nominal GDP.
If federal financial relations had not been reformed as part of The New Tax System, payments to the States in 2006-07 would have been 6.3 per cent of GDP.
Table 36: Australian Government payments to the States and Territories(a)
- There is a break in the series between 1998-99 and 1999-00. Data prior to 1999-00 are on a cash basis and data from 1999-00 are on an accrual basis.
- There was no Final Budget Outcome published for 1995-96. Estimates are from the 1995-96 and 1996-97 Budgets.
The Australian Government's tax reforms have changed the composition of the States' revenue. However, total state revenue has remained relatively constant at an average of 14.7 per cent of GDP since before the introduction of The New Tax System (Chart 3).
Chart 3: Changing composition of state revenue as a proportion of GDP
Source: ABS cat. no. 5506.0; data for 2006-07 are estimates from State 2007-08 Budgets or Treasury estimates.
1 Comparisons of payments to the States over time are difficult because of the numerous changes in payment arrangements and classifications which can occur between years. For example, in 1997‑98 higher education payments were reclassified from being specific purpose payments through the States to being payments to a multi‑jurisdictional sector.