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Tuesday, 9 June 1970

Mr BURY (Wentworth) (Treasurer) - The speech which the Leader of the Opposition (Mr Whitlam) has just made is a further example of his general economic enunciations: That certain things need to be done and it would be nice to do them; the provision of resources is easy - one just extends the amount of money available, presumably blowing up the currency further. This is a continuing chapter. His enunciation on expenditure indicates that it would be 10 times as lush as that of the most profligate Treasurer we have ever had. Let us look firstly at what has been the experience of local government authorities. The Leader of the Opposition assumes that local government bodies are starved, that they can do nothing, and that their financial basis is hopeless. Taking the total expenditures of local government authorities on a national accounting basis for 1959-60, the figure was S3 19m. For the year 1968-69 it was $68 Im. The annual increase enjoyed by local government authorities between 1959-60 and 1968- 69 was 8.8%. Correspondingly, the annual increase in the gross national product was 7.7%.

Taking the period from 1964-65 onwards total local government authority expenditure has increased at an average rate of 8% per annum and so has the gross national product. Therefore, whatever may be said about the present position of local government authorities, the resources at their disposal have been rising steadily, Let us take the Australian Loan Council borrowing programmes for State governments and semi-governmental and local authorities. In the case of the larger authorities their expenditure has risen from $173.4m for 1959-60 to an estimated $372 for 1969- 70. The average annual rate Df increase for the 5 years from 1964-65 to 1.969-70 is 8.3%. If one looks at the smaller authorities one will see that their average expenditure has risen at a faster rate than that of the larger authorities. The smaller authorities which, under the Loan Council procedures are not subject to an overall limit in their borrowing, were able to borrow S33.9m in 1959-60. Last financial year this figure had risen to $103m. an annual rate of increase of 13.5%. These semi-governmental and local authorities of all natures and sizes have enjoyed a total annual rate of increase of 9.3%. Ii one looked at the economy and suggested that all authorities and people who spend money or who have any public responsibilities should increase their outlay per annum at a rate greater than those I have mentioned, one would find that public finance difficulties would very shortly be extreme.

The Leader of the Opposition seemed to be very concerned about the policy of the Commonwealth Government and the Liberal Party. No doubt he is highly envious of the degree of unity which is established there us compared with his own Party. It has been our established policy, as federalists, to entrust the wider affairs of State governments and local and semigovernmental authorities to the State governments. This is the proper business of the State governments, lt is a natural argument for someone who wants to centralise everything in Canberra that local authorities should be financed and no doubt closely directed by the Government in Canberra. This is quite contrary to our policy. What we have done is to extend both loans and financial grants to the State governments who in turn arc responsible for allocating resources to local governments. It is relevant to say that the Commonwealth has made available to State governments large and increasing sums by way of annual revenue grants.

Mr Reynolds - What did the Premiers say?

Mr BURY - lt is undeniable; it is statistically true. No doubt anyone can argue the toss and try to get a bil more. This is human nature. This is natural. This is the perennial and insistent demand of the honourable member for Barton. This is the way the State Premiers would naturally react. No matter how much money they had they would like more. There are plenty of things they would like to do, but it is impossible to reach saturation point with large numbers of independent governmental authorities. These grants have been in the recent past paid on the basis of a formula which virtually ensures that year by year they will increase at a faster rate than the economy as a whole increases. Similarly, on the capital side, it has always been the policy, economic and budgetary conditions permitting, that capital expenditure by State governments and their authorities, including local authorities under them, be increased year by year. This in fact has been the experience. Whenever the States have not been able to raise sufficient money directly from the loan market for public works, the Commonwealth has supplemented their resources by way of loans and various direct grants rather than reduce the total programmes. The States in turn are free to allocate any part of these moneys to local authorities. In fact, the figures which T have just read out indicate that an increasing percentage year by year has gone to local authorities.

In 1961, before the Australian Loan Council, the Commonwealth took the initiative to bring in a policy whereby smaller local authorities borrowing sums not greater than $200,000 in the course of a year could borrow without limit. In June 1967 this limit on local authority borrowing was increased to $300,000. Any borrowings up to this point can be made freely and without restriction under the Loan Council borrowing programmes. Of course," it so happens that there are a good many forms of direct Commonwealth assistance to the States for specific purposes to bring considerable benefits to local authorities. Probably the most notable case is that of roads. We have also taken other steps to assist local authorities. For instance, in terms of the Constitution the Commonwealth is exempt from the payment of rates to local authorities, but both the Commonwealth Government itself and its authorities have as a matter of practice made ex gratia payments on a very wide scale. I am well aware of the situation in Newcastle, ' of which an honourable member reminds me. It is true that many public authorities everywhere would like to receive larger rates or raise a number of specific issues, but the fact is that the Commonwealth, although it is not obliged to do so under the Constitution, makes large ex gratia payments to local authorities in lieu of rates. 1 Commonwealth legislation, incidentally, has also exempted local authorities from sales tax. Quite naturally local authorites are constituted and function under State laws. Any change in this basis - -that is, the local authorites not functioning under State laws or within the compass ' of State responsibility - would be a matter of very direct and great concern to the States themselves. Any change would affect the existing patterns of Commonwealth-State relations, which depend upon the Commonwealth dealing directly with the States and in turn the States with the local authorities. A great part of financial assistance grants paid to the State governments by the Commonwealth take this into account and are strictly for the general purpose of meeting the charges on the State governments accruing from State local authorities. It is true that we levy payroll tax on local authorities. But, as with so many other arrangements, over the years this has become part of the generally agreed complex of Common wealth-State financial relationships. Most of these are embodied in specific agreements and in fact do not flow directly from the Constitution. It is a very easy task - in fact, it is the political bread and butter of the Leader of the Opposition - to go around every group and almost invite questions suggesting that more money be provided. He can ask: 'Would you not like some more money to do A, B and C? 1 am the man to provide it.' It may be a new health scheme. He has a vast number of rabbits which he is apt to pull out of his hat at any time, but they are all costly. He seems to ignore this. He is singularly silent on the ways and means of raising revenue, but as far as spending public money is concerned he is one of the most extravagant figures in Australian public life today.

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