Appendix B: Guaranteed minimum amount
The guaranteed minimum amount (GMA) is calculated using a methodology agreed by the States. The amount of each State's GMA comprises estimates of Australian Government financial assistance grants foregone, state taxes abolished by taxation reform and other items. Revenue foregone from the abolition of state taxes is only included in the calculation of GMA once all States have abolished the tax.
The Australian Government continues to guarantee that, in each of the transitional years following the introduction of The New Tax System in July 2000, the budgetary position of each State will be no worse off than if the financial reforms had not been implemented. The Australian Government has extended the transitional period for a further three years until 30 June 2009.
Where the GMA for a state exceeds the GST revenue entitlement for that state, budget balancing assistance (BBA) is payable by the Australian Government to cover the shortfall.
Prior to taxation reform, financial assistance grants were distributed among the States according to the principle of horizontal fiscal equalisation, as embodied in relativities recommended by the Commonwealth Grants Commission. As financial assistance grants foregone are included as a component of the GMA, the Commission continues to calculate relativities for the notional allocation of these grants between the States. The relativities for 2006-07 and 2007-08 are show in Table B1.
Table B1: Financial assistance grants relativities, 2006-07 and 2007-08
- These relativities take account of amended data provided by South Australia after the release of the Commonwealth Grants Commission's 2006 report.
The detailed calculation of the GMA, GST revenue entitlement and the BBA required for each State are shown in Tables B2 and B3 for 2006-07 and 2007-08 respectively.
Table B2: Guaranteed minimum amount, GST revenue provision and budget balancing assistance in 2006-07
- Where the difference between the GMA and GST revenue is less than zero, the amount is zero.
Table B3: Guaranteed minimum amount, GST revenue provision and budget balancing assistance in 2007-08
- Where the difference between the GMA and GST revenue is less than zero, the amount is zero.