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Thursday, 28 May 1942

Mr SPOONER (Robertson) (6:40 AM) . - Paragraph 12 of the report of the Special Committee on Taxation states -

The committee, in selecting a basis f 01 compensation which would be equitable as between the Commonwealth and the States, paid particular attention to the relative needs for revenue of the Commonwealth and the States in war-time, and to the existing financial arrangements in the States.

In other words, the committee took earn to see that there would be no undue disturbance of the financial position in the States. What would be the advantage of giving compensation to any one State that would place that State in deficit, and cause it to go back to the Loan Council and ask it to make up the amount of the deficit? The committee was anxious to see that whatever compensation was given to New South Wales, Queensland, South Australia, or any other State, it would not make its financial position worse than before. The honorable gentleman said that I have confused the year 1941-42 with those that were used as a basis for compensation, but that has nothing to do with the case. We reviewed the position in 1941-42, and we applied to the finances of that year the compensation basis that would arise from the two earlier years. He said that this year New South Wales is showing a surplus. It will be the first surplus for some years. Up to the end of April it amounted to £1,190,000, and that is based on the receipt of £17,200,000 from income taxation.

Sir Frederick Stewart - New South Wales has been taxing much more heavily than necessary.

Mr SPOONER - That is another story. Next year must be commenced with a reduced revenue of £1,300,000, because of the basis of compensation. If the figures for New South Wales were available in all other respects, and we could imagine static conditions, the budgetary position of that State in 1942-43 would be square. It is true that the compensation is based on 1939-40 and 1940-41, but it is based on those two years with an eye to the application of that finance to the current year. That has been done in the case of all States.

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