Senator BYRNE (Queensland) -The Australian Democratic Labor Party supports the States Grants (Capital Assistance) Bill 1973. I merely seek the opportunity to make minor comments on some of the principles which emerge from it. Any Bill of this character which relates to the financial arrangements between the Commonwealth and State governments always brings to mind the total question of the relationship between the Commonwealth and the States within the Federal concept and system. So far we have seen- more particularly over the last 12 months- and orientation of the whole of the Government's administration and policy towards the centralisation of authority in Canberra, indubitably at the cost of the States. This may be a matter of political philosophy. But at least when we come to a matter such as this and we find that the Commonwealth which has a substantial command of the sources of revenue is in a position to give money to the States on terms, even though as generous as this but on this basis, it highlights the necessity for a complete look at the concept of federation. Should we continue in this way or has an appropriate moment arrived for a redistribution of power? In what form are the States to be preserved with what functions and within what areas are they able to be viable within their own sovereignty, although it might be more limited sovereignty? Of course that will rest upon the financial structure which will support the activities and the constitutional responsibilities of the States.

Therefore I feel that this Bill should attract some thought beyond the mere provision of the financial grants and other assistance which is set out in the Bill and to which the Bill purports to give effect. Great moves are operating in Australia today at the instance of the Federal Government for further control by it over areas of constitutional life. Also the Australian Constitutional Convention has been convened at the instance of 2 State governments- certainly the Government of Victoria- and it will look at the whole question of control over finances by Commonwealth, State and local authorities. A Bill such as this rather highlights the need for some such thing to be done. These arrangements always operate from year to year, from Loan Council to Loan Council and from Premiers Conference to Premiers Conference. Probably they always result in a certain fiction that the States put their position, the Commonwealth puts its reply and a compromise is ultimately arrived at. This sometimes reminds me of the definition of a economist as one who proceeds from an unwarranted assumption to an inevitable conclusion. It is almost certain that the final formula which is arrived at in any year by the Premiers Conference or by the Loan Council is almost inevitably one which could possibly have been determined by correspondence before the conference actually met. Therefore the whole situation is unreal; it is undesirable. I feel the time has come- I think this is particularly evident in the attitude of the States- when the whole matter must be looked at.

As far as this Bill is concerned the Commonwealth has assumed a responsibility for the provision of certain moneys by way of grant to the States in lieu of the States drawing upon their loan allocations. I would say that that is equitable. At this time it is prudent and wise because of the inflation which necessarily bears most heavily upon those who are the constructing and operating authorities within the federation. The States have to operate substantially all the public and semi-public utilities. That will have the effect of at least eliminating what, to my mind, has been a matter of grave concern and that is the continuing rise in the debt level of the States as against the position of the Commonwealth which finances all its own works from revenue as it has done for many years. The States are required to finance their debts from within their own program. So there is a rise in the level of State liability and a diminution and even disappearance of the level of Commonwealth financed debits within the accounts.

Sitting suspended from 1 to 2 p.m.

Senator BYRNE - Before the suspension of the sitting I was making some observations on the remote implications of the Bill which is before the Senate- the State's Grants (Capital Assistance) Bill- and drawing attention to those wider implications so far as they seem to indicate the need for a redefinition of the relative powers of the Commonwealth and the States so that the States would have a real and viable sovereignty. Instead of the sporadic and somewhat arbitrary grants which are determined by agreement between the Commonwealth and the States there should be some on-going financial arrangement which would enable the States at any time to see where they stand either in relation to their total finances or the particular areas in which now they receive special grants for assistance or loan support from the Commonwealth Government. I am glad to see that the Commonwealth Government has assumed certain responsibilities by way of substituting grants for borrowings on behalf of the States so that at least half of the indebtedness of the States is relieved, and that the Commonwealth has assumed a responsibility, for example, for the provision of welfare housing and capital works arising from the new Commonwealth approach to the assumption of responsibility for tertiary education; and the consequential capital saving that will result from that which is now the burden of the States.

I am looking forward to the results of the deliberations of the Constitutional Convention so that as Australia moves into the next 30 years we can have a completely new distribution of power, so that the States no longer will feel themselves to be mendicants at the table of the Commonwealth and so that the Commonwealth will know at any time in view of its new international responsibilities just where it is going, where its areas of power, clearly and undisputably will lie and the States will have not only the responsibility for certain things but will have the means at their disposal without having to resort to alternative sources of finance by way of annual agreements or special approaches to finance their duties within the Constitution. Within these terms the Democratic Labor Party supports the Bill and will assist its passage through the Senate.