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Wednesday, 24 October 1956

Sir ARTHUR FADDEN (McPhersonTreasurer) . - I move -

That the bill be now read a second time.

The purpose of this bill is to authorize the payment, during the current financial year, of special grants amounting to £18,500,000 to South Australia, Western Australia and Tasmania. The payment of these grants was recommended by the Commonwealth Grants Commission in its twenty-third report, which has now been tabled.

In its twenty-third report the commission has continued to base its recommendations upon the general principle of financial need. The commission has interpreted this principle to mean that provided the efforts made by a claimant State to raise revenue and to control expenditure are reasonable by comparison with the efforts made by the non-claimant States, its special grant should bc sufficient to enable it to function at a standard not appreciably below that of the non-claimant States. In applying this principle the commission makes a detailed comparison of the budget results of the claimant

States with those of the non-claimant States. When making this comparison the commission takes particular account of differences in levels of expenditure and of efforts to raise revenue.

The special grants recommended each year are divided into two parts. One part represents the commission's estimate of the State's financial needs for the current financial year. This part is regarded by the commission as an advance payment which will be the subject of an adjustment two years later when the commission has examined in detail the audited budget results of the States for that year. The other part of the grant represents a final adjustment of the special grant paid two years earlier. The grants recommended for payment this year are therefore made up as follows: -

In total, the special grants recommended for payment in 1956-57 are the same as last year. It is estimated, however, that the tax reimbursement payments to the claimant States will increase by £3,711,000 in 1956-57. The net effect, therefore, is that the total revenue grants to the claimant States will rise by about £3,711,000 in 1956-57, of which South Australia will receive £2,077,000, Western Australia £1,627,000 and Tasmania £7,000 more than in 1955-56.

On the basis of the preliminary estimates submitted to the commission last July by the claimant States, the commission's recommendations would leave South Australia with a prospective budget deficit of £822,000, Western Australia with a deficit of £1,648,000 and Tasmania with a deficit of £843,000. These estimates, however, were highly tentative and, in any event, the special grants paid this year will be reviewed by the commission in two years' time in the light of the States' audited budget results for 1956-57.

The special grants recommended by the Commonwealth Grants Commission have been adopted each year by the Australian government of the day and the Government considers that the commission's recommendations should be adopted again this year. I commend the bill to honorable members.

Debate (on motion by Mr. Calwell) adjourned.

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