Mr ROBERT BROWN(10.39) —A short time ago, I made reference to the decreasing real value of the total grants that have been made available to the States since this Government first came to office in 1975-76. I indicated on that occasion that I would take the opportunity to pursue the matter further and to explain the developments that have taken place, not only in relation to the total grants being made available to the States, but also, more particularly, to the effect that the States have experienced as a result of the policies of this Government in relation to their general purpose capital grants and their specific purpose grants. On that previous occasion I referred to the fact that during the current year in real terms the total States grants are deficient to the extent of $1,418m compared with the amount the States received in total in 1975-76. I also referred to a statement made by the Minister for Industry and Commerce (Sir Phillip Lynch), at the Liberal Party's New South Wales council meeting in Maitland in March this year. At that conference the Minister also said:

The States can expect little joy from Commonwealth decisions in the short months ahead.

It is becoming increasingly apparent exactly what that statement means. The most recent spectacle was the States' being denied the $70m that both the Prime Minister (Mr Malcolm Fraser) and the Treasurer (Mr Howard) had been authorised by Cabinet to allow to them. Following that, we saw the public humiliation of the States throughout the whole of the Commonwealth. We saw a very serious reaction from the States when they realised the extent to which they had been conned, the reasons they had been conned and the way in which both the Prime Minister and the Treasurer paraded themselves before the media to show how strong and clever they had been, not only at the expense of the State Premiers and State governments, but also at the expense of the residents in the States.

I wish to develop further the points I made previously in relation to grants. First of all, I will deal specifically with the general purpose capital funds allocated to the States. In 1975-76 general purpose capital funds to the States totalled $1,291m. In the current financial year, 1980-81, general purpose capital funds to the States total $1,307m. That represents an increase during those five years of only 1.2 per cent. In order to maintain their real value in terms of what has happened to costs and prices during that period, they should have increased by 63.4 per cent or $818m. The actual increase that has taken place in those capital funds has not been anything like the $818m necessary in order to retain their real value. They have increased by only $16m during those five years. That means that in this year alone general purpose capital funds to the States are deficient in real terms to the extent of $802m.

The situation in relation to specific purpose payments is essentially the same. In 1975-76 the allocations to the States were $4,152m. In the current year they are $5,227m. In other words, they have increased by 26 per cent. During that period prices have increased by 63.4 per cent. If specific purpose payments to the States had maintained their real value, they would have increased by $2,632m. In fact, the actual increase was $1,075m. Therefore, in this year alone, specific purpose payments to the States are deficient in real terms to the extent of $1,567m. The substance and the import of the statements made by the Prime Minister, the Treasurer and the Minister for Trade and Resources (Mr Anthony) are becoming increasingly apparent to the States. There has been a very well orchestrated campaign on the part of the Government to squeeze the States and to put them into a position of being seriously disadvantaged.