NEW ISSUES FOR THE 2013 UPDATE
Commission staff discussion paper
CGC 2012-02-S
SUBMISSION BY SOUTH AUSTRALIAN DEPARTMENT OF TREASURY AND FINANCE
SEPTEMBER 2012
SOUTH AUSTRALIAN SUBMISSION ON NEW ISSUES FOR THE 2013 UPDATE
This submission represents South Australia’s views on issues raised in the Commonwealth Grants Commission (the Commission) Staff Discussion Paper on New Issues for the 2013 Update (CGC 201202S).
South Australia will provide comments on the 2011 Census issues (state population estimates) after the Population Estimates Technical Workshop and the Australian and New Zealand Population Workshop has been held (15 to 18 October 2012).
Treatment of National Specific Purpose Payments (SPPs)
Consistent with the 2011 reforms to the Intergovernmental Agreement on Federal Financial Relations (IGA), South Australia supports backcasting the Schools, Skilled Workforce Development and Affordable Housing SPPs (20% historical and 80% EPC) and the National Health Reform base funding and Disability SPP (full EPC distribution).
Treatment of Commonwealth payments that commenced in 2011-12
South Australia supports the treatments proposed in Attachment A, Table A-1 with the following exception:
Adelaide Oval Redevelopment and Precinct Works Project Agreement
Commonwealth assistance has been provided to fund two linked but separate outputs.
Funding for the first output - “Redevelopment of the Adelaide Oval” ($18 million or 60% of total funding) – will assist in the construction of underground car parking for the Adelaide Oval. The upgraded Adelaide Oval will be a sporting/recreational facility. Currently, sporting facilities are a component of culture and recreation expenses that are assessed in the Other Expenses category. Culture and recreation expenses are not differentially assessed. Accordingly South Australia believes that this component of funding should be nonimpacting.
Funding for the second component – “Enhancement works to adjacent northern Riverbank Precinct” ($12 million or 40% of total funding) – will primarily assist in the creation of a wetland at Pinky Flat (north bank of the Torrens Lake). The wetland will create a natural waterscape that will allow the re-establishment of original flora and the return of native wild life to the Torrens precinct. The wetland will also contribute to improving the ecology of the Torrens Lake.
The primary focus of this funding will be for environmental protection/enhancement – an expense component that is not differentially assessed. Accordingly, South Australia believes that this component of funding should be non-impacting.
Other Commonwealth payments
National Partnership – Transitioning responsibilities for aged and disability services
South Australia believes that the treatment proposed by the Commission for this NP and related funding is consistent with the 2011 amendments to the IGA that stated that changes to the roles and responsibilities for funding and delivering Home and Community Care, aged care and disability services should not influence relativities.
National Partnership – Changed roles and responsibilities – adjustment to achieve budget neutrality
South Australia supports the proposed treatment.
Regional Infrastructure Fund – Stream 2 – Economic Infrastructure Projects
South Australia previously held the view that these payments should treated like other national network road construction payments. However, we are satisfied with the Commission’s further investigation into the nature of the projects and their conclusion that the majority of funding is for off-network roads. Accordingly, South Australia supports the Regional Infrastructure Fund payments (both Stream 1 and Stream 2) impacting on relativities. It is important that it be made clear that the treatment of these grants is not inconsistent with the 50:50 treatment of national network roads where there is a definite interstate purpose not just intrastate.
Commonwealth payments commencing in 2012-13
South Australia supports the proposed recommendation to not back-cast any Commonwealth payments commencing in 2012-13 or 2013-14.
Mining revenue – treatment of iron ore fines
South Australia accepts the recommendation to not consider how Western Australia’s changed royalty arrangements might be treated until the 2014 Update when a response to the GST Distribution Review should be known. Other things equal, however, it would be expected that iron ore fines would be assessed in the high rate category in the 2014 Update.
Stamp duty on conveyances – adjustment for non-real property transfers
South Australia does not agree with the approach of determining average policy based on non-binding announcements in this instance given the fluidity in this area and the weakness in GST and other revenues relevant to decisions. Average policy does not change until a majority of jurisdictions implement a change.
South Australia can provide the data to accurately remove duty collected on the transfer of non-real property if required.
Stamp duty on conveyances – adjustments for duty on transfer of listed companies which hold land.
South Australia is comfortable with the Commission obtaining information on the volume and magnitude of these transactions as part of the current data up-date process and the coming back to States and Territories with a recommended approach.
Insurance tax – APRA premiums data
Commission staff have advised that they will be writing to State Treasuries requesting approval for the release of APRA data. South Australia will approve this request when received.
Services to industry – agriculture factor income
South Australia supports the continued use of the ABS agriculture factor income data.
The comparability of state natural disaster relief expenses
South Australia supports the recommendation to wait for the Department of Finance and Deregulation’s final report on state insurance arrangements before considering the appropriateness of the current APC assessment of State natural disaster relief expenses.
South Australia Department of Treasury and Finance
September 2012
Contact Officers:
Katrina Ball
Director, Intergovernmental Relations
08 8226 9698
Mark Collins
Principal Economic Analyst, Intergovernmental Relations
08 8226 3833
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