Attachment A - Agreement to Implement the National Competition Policy and Related Reforms
Council of Australian Governments Meeting
11 April 1995
WHEREAS the Council of Australian Governments at its meeting in Canberra on 11 April 1995 agreed to a program for the implementation of the National Competition Policy and related reforms;
AND WHEREAS the Commonwealth and the States have agreed to financial arrangements in relation to the implementation of National Competition Policy (NCP) and related reforms;
THE COMMONWEALTH OF AUSTRALIA
THE STATE OF NEW SOUTH WALES
THE STATE OF VICTORIA
THE STATE OF QUEENSLAND
THE STATE OF WESTERN AUSTRALIA
THE STATE OF SOUTH AUSTRALIA
THE STATE OF TASMANIA
THE AUSTRALIAN CAPITAL TERRITORY, AND
THE NORTHERN TERRITORY OF AUSTRALIA agree as follows:
The provision of financial assistance by the Commonwealth is conditional on the States making satisfactory progress with the implementation of NCP and related reforms (as set out below). The Commonwealth's commitment is on the basis that the financial arrangements will need to be reviewed if Australia experiences a major deterioration in its economic circumstances.
The Commonwealth will maintain the real per capita guarantee of the FAGs pool on a rolling three year basis.
This will involve the Commonwealth extending the guarantee to 1997-98 now.
The per capita element will have an estimated annual cost to the Commonwealth of $2.4 billion by 2005-06 (see table).
Local government will benefit from the link between the State and Local Government FAGs pools.
There will also be three tranches of general purpose payments in the form of a series of Competition Payments.
The first tranche of Competition Payments will commence in July 1997 and will be made quarterly thereafter.
The annual payment from 1997-98 under the first tranche will be $200 million in 1994-95 prices.
It will be indexed annually to maintain its real value over time.
Commencement of the first tranche of the Competition Payments and the per capita guarantee is subject to the States meeting the conditions set out below.
The second and third tranches of the Competition Payments will commence in 1999-2000 and 2001-02. The annual Competition Payments will be $400 million, in 1994-95 prices, from 1999-2000 and $600 million, in 199495 prices, from 2001-2002. These payments will also be indexed in real terms.
The Competition Payments to be made to the States in relation to the implementation of National Competition Policy (NCP) and related reforms will form a pool separate from the FAGs pool and be distributed to the States on a per capita basis. These Competition Payments will be quarantined from assessments by the Commonwealth Grants Commission.
If a State has not undertaken the required action within the specified time its share of the per capita component of the FAGs pool and of the Competition Payments pool will be retained by the Commonwealth.
Prior to 1 July 1997, 1 July 1999, and 1 July 2001 the National Competition Council will assess whether the conditions for payments to the States to commence on those dates have been met.
Conditions for Payments to the States
The first payments will be made in 1997-98 to each participating State as at the date of the payment and depending upon:
1. that State giving effect to the Competition Policy Intergovernmental Agreements and, in particular, meeting the deadlines prescribed therein, in relation to the review of regulations and competitive neutrality;
2. effective implementation of all COAG agreements on: -
- electricity arrangements through the National Grid Management Council,
- the national framework for free and fair trade in gas; and
3. effective observance of road transport reforms.
Payments under the second tranche of the Competition Payments will commence in 1999-2000 and be made to each participating State as at the date of the payment and depending upon:
1. that State continuing to give effect to the Competition Policy Intergovernmental Agreements, including meeting all deadlines;
2. effective implementation of all COAG agreements on: -
- the establishment of a competitive national electricity market,
- the national framework for free and fair trade in gas, and
- the strategic framework for the efficient and sustainable reform of the Australian water industry; and
3. effective observance of road transport reforms.
Payments under the third tranche will commence in 2001-02 and be made to each participating State as at the date of the payment and depending on the State:
- having given full effect to, and continues to observe fully, the Competition Policy Intergovernmental Agreements; and
- having fully implemented, and continues to observe fully, all COAG agreements with regard to electricity, gas, water and road transport.
Full details of the conditions are set out in the Attachment.
Signed for and on behalf of each of the Parties by:
The Honourable Paul John Keating MP
(Prime Minister of the Commonwealth of Australia)
on the 11th day of April 1995) in the presence of:
The Honourable Robert John Carr MP
(Premier of the State of New South Wales)
on the 11th day of April 1995 in the presence of:
The Honourable Jeffrey Gibb Kennett MLA
(Premier of the State of Victoria)
on the 11th day of April 1995 in the presence of:
The Honourable Wayne Keith Goss MLA
(Premier of the State of Queensland)
on the 11th day of April 1995 in the presence of:
The Honourable Richard Fairfax Court MLA
(Premier of Western Australia)
on the 11th day of April 1995 in the presence of:
The Honourable Dean Craig Brown MP
(Premier of the State of South Australia)
on the 11th day of April 1995 in the presence of:
The Honourable Raymond John Groom MHA
(Premier of the State of Tasmania)
on the 11th day of April 1995 in the presence of:
Kate Carnell MLA
(Chief Minister of the Australian Capital Territory)
on the 11th day of April 1995 in the presence of:
The Honourable Marshall Bruce Perron MLA
(Chief Minister of the Northern Territory of Australia)
on the 11th day of April 1995.
Table 1 - National Competition Policy Payments (a)
PC = Per Capita
| PC (b) State | PC (b) Local Govt. | PC (b) (c) Total | PC (b) Total | Competition Payment | State & Local Govt. Total Payments | |||
|---|---|---|---|---|---|---|---|---|
| Year | $m | $m | $m | 1994-95 Prices $m | $m | 1994-95 Prices $m | $m | 1994-95 Prices $m |
| 1997-1998 | 194 | 14 | 209 | 186 | *219 | 200 | 428 | 386 |
| 1998-1999 | 392 | 29 | 420 | 365 | 226 | 200 | 646 | 565 |
| 1999-2000 | 604 | 44 | 647 | 546 | *465 | 400 | 1113 | 946 |
| 2000-2001 | 829 | 60 | 890 | 729 | 479 | 400 | 1369 | 1129 |
| 2001-2002 | 1070 | 78 | 1148 | 914 | *739 | 600 | 1888 | 1514 |
| 2002-2003 | 1327 | 97 | 1423 | 1101 | 761 | 600 | 2184 | 1701 |
| 2003-2004 | 1600 | 117 | 1716 | 1290 | 783 | 600 | 2499 | 1890 |
| 2004-2005 | 1890 | 138 | 2028 | 1481 | 806 | 600 | 2833 | 2081 |
| 2005-2006 | 2198 | 160 | 2359 | 1675 | 829 | 600 | 3188 | 2275 |
| Total | 10104 | 736 | 10840 | 8286 | 5307 | 4200 | 16147 | 12486 |
| * Indicates year in which each additional payment is made (a) Estimates (b) Population growth is assumed to be about 1.1% from 1997-98 onwards. (c) Reflecting the existing link between the respective pools. | ||||||||
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