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Wednesday, 9 May 1984
Page: 1791


Senator GARETH EVANS (Attorney-General)(10.10) —I move:

That the Bill be now read a second time.

Mr President, I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows-

The purpose of this Bill is to make two separate amendments to the States (Tax Sharing and Health Grants) Act 1981. The Act determines the amount of general purpose payments to the States in the forms of tax sharing grants and identified health grants until 30 June 1985 and provides for the distribution of the total amount of those grants among the States.

The two amendments proposed in this Bill are designed:

First, to give effect to an agreement with the States, made in the context of the negotiation of the Medicare agreements, that general purpose payments to the States after 30 June 1984 would be reduced by amounts in respect of the operation of Commonwealth pathology laboratories not taken over by the States; and

Second, to make provision for continuing the payment of general purpose assistance to the States after 30 June 1985 pending the enactment of new legislation to replace the existing Act.

The first amendment corrects an anomaly which goes back to a decision announced by the previous Government at the May 1981 Premiers' Conference. At that time, the Commonwealth announced its intention to transfer its pathology laboratory operations to the States. As a consequence, an amount was added to the States' tax sharing grants for 1981-82 and subsequent years to compensate them for this additional responsibility. With the exception of Western Australia, however, the States have not taken over the laboratories. The result has been that since 1981 -82, the Commonwealth has effectively funded the operation of the laboratories twice, both by direct funding and indirectly through the tax sharing grants.

At the June/July 1983 Premiers' Conference, the Commonwealth indicated its intention to remove the anomaly and it was agreed with the States that an appropriate adjustment would be made to apply from 1 July 1984.

The Commonwealth's original proposal was for the adjustment to be made to the Medicare compensation grants specified under the Medicare agreements with each State. Some States, however, indicated that they considered the adjustment to be a matter separate from the establishment of Medicare. The Commonwealth therefore agreed that the adjustment would be made instead to the identified health grants and Medicare agreements were subsequently concluded with all States on that basis. The amount of the adjustment to be made in 1984-85 comprises the amounts agreed at the Premiers' Conference increased in accordance with the increase in the consumer price index in 1984-85.

I now turn to the second amendment. The States (Tax Sharing and Health Grants) Act 1981 requires that before payments under the Act cease on 30 June 1984 the Commonwealth shall consult with the States to review the provisions of the Act. The States have already been involved in the preparation of terms of reference under which the Commonwealth Grants Commission has commenced a review of the distribution of tax sharing grants amongst the States. The Commission's assessments will form an important element in the negotiation of new arrangements. The Commission is due to report by 30 March 1985.

As consultations with the States on new tax sharing arrangements could not be commenced in detail until after that time, it seems highly unlikely that new legislation to provide for general purpose payments to the States from 1 July 1985 could be introduced into the Parliament until the Budget session of 1985.

The amendment now proposed will allow the Treasurer (Mr Keating) to continue the regular payment of general purpose assistance to the States beyond 30 June 1985 until new legislation comes into force; payments may be made during the six months from 1 July 1985 with the amount payable being limited to half the amount paid to each State in the previous year. Similar provisions have been made in other legislation involving regular payments to the States including the States (Works and Housing) Assistance Act 1983. I commend the Bill to the Senate.

Debate (on motion by Senator Reid) adjourned.