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Wednesday, 15 May 1985
Page: 1984

Senator CHANEY —My question is addressed to the Minister for Finance-and I preface it by saying that we should offer him to the North Atlantic Treaty Organisation, because his answer drove out the Russians from the visitors gallery. I refer to the earlier answer given by Senator Walsh concerning the provision of grants for States in 1985-86 and the $1 billion provision to which he referred. Does the Minister accept that an increase in real terms of 2 per cent in payment to the State governments would amount to $800m? If so, and given the list of programs which are shown in the Forward Estimates as having a conservative bias which is required to be covered, can he give a binding assurance that the $1 billion allowance to which he referred will be sufficient to accommodate grants to the States and all the other items that were mentioned which it was supposed to cover?

Senator WALSH —I thought that Senator Walters drove the Russians out, lest somebody took a photograph from this side of the chamber which would show Senator Walters being photographed with the Russians. It is the sort of trick to which other people on her side of politics have resorted to in the past.

The PRESIDENT —Order! The Minister should answer Senator Chaney's question.

Senator WALSH —I do not have in front of me now the figures of the total payments to the States last year. I think it is in the vicinity of $15 billion or $16 billion. But whether a 2 per cent real increase amounts to a $800m increase on whatever money amount will be paid this year would depend on whatever deflator one likes to choose. I do not know what deflator Senator Chaney has used in making that calculation. The deflator which will finally be accepted in the Budget has yet to be determined. The deflator implicit in the Forward Estimates published last week was, of course, arrived at towards the end of last year. If the same estimating exercise were done today, a different figure would probably be produced. It is not possible to give a precise definition at this stage. If Senator Chaney would state a particular assumed deflator, it would be quite easy to do the arithmetic exercise and add on to this year's money payments. I can do that for Senator Chaney if he likes to supply the figure of the deflator.

As for the rest, if I understood Senator Chaney correctly, he asked whether I would guarantee that every item of expenditure, including whatever upward adjustments in the money payments to the States are finally arrived at at the Premiers Conference, will be accommodated within that $1,000m. No, I will not give any such guarantee. I ask Senator Chaney to remember in regard to expenditure, as the Prime Minister and the Treasurer have both made clear, that the Government has not yet concluded its scrutiny of the outlay side. I invite Senator Chaney, as I invited Senator Durack earlier, to be patient until August. They will be disappointed, but the rest of the nation will not be.

Senator CHANEY —I thank the Minister for that answer, but I ask a supplementary question. The inference from his answer to Senator Tate was that the $1 billion was specifically there to accommodate any increase in payments to States. Does he now agree that it was there to accommodate possible increases in a range of programs, including payments to the States? Is he now conceding that he is in no position to guarantee that the $1 billion will cover the range of programs which might require change, many of which are set out in his own report on the Forward Estimates of Budget outlays?

Senator WALSH —The billion dollars was described in the Forward Estimates, in the published document, as a conservative bias. The major component of that conservative bias was an allowance for whatever increase in money payments to the States is arrived at in the Premiers Conference. By its very nature, if one has a figure of $1,000m, it suggests that it is not a very precise or scientific calculation. It is a figure which entails judgmental elements written in, but most of it was attributable to-although never explicitly identified as such-money increases in payments to the States, and some much less important programs in which judgments were made about a requirement to continue some form of payment, even though there was no legislative obligation to do so beyond the end of June this year.