Garnaut Fitzgerald Review of Commonwealth-State Funding

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CHAPTER 13: Commonwealth–State Financial Relations for the 21 st Century FIGURE 13.1: Funding arrangements under the proposed model OLD SYSTEM NEW SYSTEM PROPOSED DISTRIBUTION Untied grants GST revenue grants $29.4b Lump sum for minimum cost of government ($98m per State) Budget balancing assistance National Competition Policy payments $1.7b $0.7b General purpose funding $31.8b Remainder distributed equally per capita Tied grants All SPPs excluding those listed below $14.1b Health and Aged Care Program Education and Training Program $10.2b $3.9b Age adjusted population Number of government school students and publicly funded VET Indigenous SPPs $0.2b Indigenous Community Development Program $0.2b Determined by the Commonwealth in consultation with the States ‘Through’ SPPs (to nongovernment schools, local government) $3.7b ‘Through’ SPPs $3.7b No change Cross border and agency SPPs $1.1b Cross border and agency SPPs $1.1b No change Royalty SPPs $0.3b Royalties $0.3b No change These are significant reforms, with considerable effects on total funding for some States – particularly in the short term. Transitional arrangements are discussed in Section 13.2. FINAL REPORT [196]
CHAPTER 13: Commonwealth–State Financial Relations for the 21 st Century 13.2 Guarantee arrangements The Terms of Reference ask the Review to recommend appropriate transitional arrangements where necessary. Recognising the importance of transitional arrangements, the model for reform includes a guarantee that the current level of funding for all States will be maintained in real per capita terms. The model provides for a simple real per capita guarantee to each State on the sum of general purpose payments and funding for the Health and Aged Care and Education and Training Programs. The guarantee ensures that each State’s current level of funding will be maintained in real per capita terms. Funding for the guarantee would be provided by States with total grants from the formula exceeding the guarantee benchmark. As the budget balancing assistance funds are added to the untied grants pool, this established guarantee could be seen as the first source of funding for the new guarantees. The balance would be drawn from GST revenue allocations of States that are above the guarantee benchmark. Table 13.1 summarises the way funding for a State is determined subject to the guarantee, using the Australian Capital Territory as an example. TABLE 13.1: Calculating a State’s funding: Australian Capital Territory, 2003–04 $m Base allocation for 2003–04 Untied: minimum cost of Government 100 Untied: equal per capita share 514 Health and Aged Care Program 158 Education and Training Program 64 Total a 836 Guaranteed minimum amount Previous year funding (2002–03) Untied: minimum cost of Government funding 98 Untied: equal per capita share 500 Health and Aged Care Program 152 Education and Training Program 62 Sub-total b 812 Population growth factor c 1.002 CPI factor d 1.025 Total e = b*c*d 873 Total funding Base allocation a 836 Guarantee Adjustment f = e-a 37 Total g = a+f 873 FINAL REPORT [197]
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Review of Commonwealth-State Fundin
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Review of Commonwealth-State Fundin
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TABLE OF CONTENTS CHAPTER 9: Equity
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THE REVIEW COMMITTEE FINAL REPORT [
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EXECUTIVE SUMMARY Overall assessmen
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EXECUTIVE SUMMARY Each State would
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CHAPTER 1: Overview and Summary of
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CHAPTER 2: How the System Grew: A H
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CHAPTER 3: The Current System TABLE
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CHAPTER 3: The Current System 3.3 G
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CHAPTER 3: The Current System Natio
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CHAPTER 3: The Current System FINAL
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CHAPTER 4: Allocation of General Pu
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Chapter 5: Specific Purpose Payment
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CHAPTER 6: Comparative Fiscal Posit
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CHAPTER 7: Other Federations 7.2 Ve
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CHAPTER 7: Other Federations Sales
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CHAPTER 7: Other Federations The Un
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CHAPTER 7: Other Federations Popula
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CHAPTER 7: Other Federations 7.4 Co
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CHAPTER 7: Other Federations In 200
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CHAPTER 7: Other Federations In 200
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CHAPTER 7: Other Federations In add
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CHAPTER 7: Other Federations Compar
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CHAPTER 7: Other Federations FINAL
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CHAPTER 8: Federal Policy Effects o
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CHAPTER 9: Equity Chapter 1 notes t
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CHAPTER 9: Equity Both SPPs and gen
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CHAPTER 9: Equity Table 9.3 shows t
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CHAPTER 9: Equity 9.3 Horizontal di
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CHAPTER 9: Equity Many ways to rais
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CHAPTER 10: Efficiency and Economic
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Page 156 and 157: CHAPTER 10: Efficiency and Economic
Page 166 and 167: CHAPTER 11: Simplicity, Transparenc
Page 184 and 185: CHAPTER 12: Overall Assessment and
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Page 216 and 217: APPENDIX A: National Health and Age
Page 218 and 219: APPENDIX A: National Health and Age
Page 220 and 221: APPENDIX B: National Education and
Page 226 and 227: APPENDIX C: National Indigenous Com
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Page 230 and 231: APPENDIX D: Minimum Cost of Governm
Page 236 and 237: APPENDIX E: Consultation • Local
Page 238 and 239: APPENDIX E: Consultation • VICRoa
Page 240 and 241: GLOSSARY Efficiency: allocative eff
Page 242 and 243: GLOSSARY merit goods (health, educa
Page 244 and 245: FINAL REPORT [234] GLOSSARY
Page 246 and 247: BIBLIOGRAPHY Buchanan, JM 2001, Fis
Page 248 and 249: BIBLIOGRAPHY Government of Victoria
Page 250 and 251: BIBLIOGRAPHY Watts, RL 1999, Compar
Page 252 and 253: INDEX E economic activity / growth
Page 254 and 255: INDEX O other Federations Canada ·
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Garnaut Fitzgerald Review of Commonwealth-State Funding

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