National Competition Policy Payments to States and Territories for 2004

The Treasurer today announced that the Commonwealth will make competition payments to the States and Territories (States) totalling more than $724.1 million.

The payments follow an independent assessment by the National Competition Council (NCC) of progress by the States in implementing National Competition Policy (NCP) reform commitments.

The estimated maximum level of competition payments available in 2004-05 is $777.6 million. The actual payment of approximately $724.1million reflects adjustments for penalties and reimbursements.

In its 2004 assessment, the NCC recommended that Victoria, Tasmania and the Australian Capital Territory receive their maximum payments. Reimbursements of 2003-04 suspensions, totalling $85.1million, were recommended for all States in recognition of the substantial progress made in the past 12months. Suspensions of $114.1million and permanent deductions of $26.2million of 2004-05 payments were recommended where obligations remained outstanding.

The NCC has indicated that it will recommend that the 2004-05 specific suspensions be lifted and reimbursed if and when jurisdictions sufficiently progress reform. Similarly, with respect to this year’s pool suspensions, the NCC will reassess these penalties, and where satisfactory progress is made, may recommend that the suspension be lifted or reduced and the suspended amounts reimbursed.

Payments and penalties for 2004-05 (subject to adjustment for changes in CPI, population estimates and supplementary assessments) and reimbursements for 2003-04 are:

(Totals may not add due to rounding. Actual Payments also include adjustments finalising 2003-04 competition payments.)

These competition payments are entirely separate from GST revenue and Budget Balancing Assistance paid to the States.

When the NCP agreements were adopted by the Commonwealth and State governments in 1995, legislation reviews and associated reforms were to have been completed by 2000. In November 2000, the Council of Australian Governments agreed to extend the deadline for these reviews to June 2002. Subsequently, governments were provided a further year in which to finalise their reviews and responses.

NCP does not require governments to repeal all restrictions on competition or to deregulate or privatise industries. It requires governments to undertake transparent and rigorous reviews of legislation that restrict competition and to reform those restrictions on competition, except where it would be contrary to the public interest to do so.

The public interest test means that restrictions on competition that are of net benefit to the community as a whole can be maintained, unless that net benefit can be achieved in other, less anti-competitive, ways.

Details of the 2004 assessment will be available on the NCC’s website (www.ncc.gov.au).