Mr BEAZLEY —My question is to the Prime Minister. Will the government provide a guarantee to the states and territories at the Premiers Conference tomorrow that specific purpose payments will not be cut in the future, leaving the states with no option but to raise the rate of the GST to pay for essential health, aged care and education services?

Mr HOWARD (Prime Minister) —This question passes strange out of the lips of the man whose government had 13 years to fix Commonwealth-state financial relations and did absolutely nothing at all. What I can guarantee to the Leader of the Opposition is that tomorrow I will talk to the premiers and the chief ministers of the Australian states and territories about the best ever offer from a federal government since World War II to reform Australia's financial relations. I have already indicated in private discussions with the premiers that we have no intention of using the route of specific purpose payments to take away through the back door what we are clearly giving in a very generous fashion through the front door in relation to our proposal.

What has got to be understood by the Leader of the Opposition, and what should be understood by all those who care about the provision of adequate money for roads, for schools, for hospitals and for police services in the states, is that the only way you can guarantee the continued existence of those services years into the future is to adopt the coalition's taxation reform plan.

One of the strangest things about the debate on the goods and services tax is that people attack it in the name of defending the welfare sector. This is a great defence of the welfare sector because what this plan will do is to guarantee, like no other plan, a flow of funds from the federal government to the state governments so they can provide the money for schools, hospitals and the police.

If any of you people who sit opposite, particularly the members who have joined us as a result of the last election, are interested in adequate schools, adequate health provision and adequate police services, you will change your opposition to the government's taxation plan. You will change your opposition to the government's taxation plan because this is the greatest gift that any federal government has offered to the states of Australia to reform their capacity to maintain essential services.