Senate Economics References Committee
Appendix 5: National competition policy revenue - Sharing the gain from the pain
The NCP reform package was designed to improve the efficiency of the Australian economy, leading to lower prices for consumers and higher living standards for all Australians. Local government activities were specifically referenced in the agreement between the Commonwealth and the states and territories. NCP reforms have and will continue to make significant demands on local government across Australia.
NCP payments are intended to reflect the share of additional revenue through the Commonwealth tax base as a consequence of the higher economic growth resulting from the implementation of effective competition reform. Only the Queensland, Victorian and Western Australian state Governments share this revenue with local government. This is despite continual recommendations from the National Competition Council (NCC) to share such payments.
There is still a lack of recognition of NCP reform at the local government level in New South Wales, Tasmania, South activities and, the Northern Territory. In these jurisdictions local government has kept up with the reform agenda (enabling those governments to receive their full competition payments) but as yet they have not been able to share with those states and the Government of the Northern Territory in the direct benefits of NCP.
Payments are not made directly from the Commonwealth to local government (who is an active participant) despite the fact that the NCP principles explicitly mention the participation of local government in NCP reforms.
Local government has made significant reforms since the inception of NCP. Some these include water pricing on a user cost basis, and structural reforms of local government businesses to ensure they are competitively neutral. As a participant in NCP, local government is subject to the same oversight and complaint mechanisms as are the states and territories and the Commonwealth.
