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Thursday, 14 June 1984
Page: 3007


Senator WALSH (Minister for Resources and Energy)(12.40) —I do not intend to delay the passage of this legislation or to reply to anything that Senator Dame Margaret Guilfoyle has said, except in regard to the amendment which she will move. She did not explain why the Government is alleged to have broken its pre-election promises. But I recall questions being asked on this subject last year and, in the absence of any explanation, I assume that the Opposition is asserting that the Government failed to honour pre-election promises to maintain the level of funding to local government in real terms. In fact, that promise has been honoured. The Opposition used an inappropriate or false analysis in support of its assertion that the promise to maintain the level of funding in real terms had not been honoured. In fact, in 1983-84 payments to local government increased by 8.2 per cent. The Opposition used the consumer price index June on June figure, I think it was-June 1983 on June 1982 figure-and said that that was the appropriate deflator to apply to local government payments. Of course, the appropriate deflator to apply to payments to local government is the year on year change in the CPI or whatever other index is chosen to be used. The year on year increase in the CPI-this is for 1983-84 on 1982-83-cannot, of course, be finally determined at this stage because the year is not finished. But it will certainly be below 8.2 per cent.

Looking further ahead to 1984-85, it is not possible to determine now what will be the levels of payment to local government in 1984-85 and therefore it is not possible to determine the percentage increase in those payments compared with those for 1983-84. However, it is apparent that the consumer price index year on year figure for 1984-85 on 1983-84 will be below 5 per cent. Even more appropriately, probably, to local government is the fact that the increase in wages-this is based on the assumption that the incomes policy holds, and there is every indication that that will be the case-which is a very important component of local government expenditure, as it is of State government expenditures, over the next financial year will be minimal. The reason is that, because of the Medicare effect, the CPI increase for the six months ended June will be very low and therefore the wage adjustment made next September will be very low. That wage adjustment will determine the level of wages paid for six months in the next financial year and the prevailing level of wages will apply for the first three months. So it is apparent that the consumer price index for 1984-85 on 1983-84 will be below 5 per cent. The wages index-probably a more appropriate index to use for local government-will be even lower. Therefore, although it cannot be positively determined now, there is every likelihood that payments to local government under these tax sharing arrangements will again be more than maintained in real terms provided that the appropriate and logical deflator is used.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.