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Tuesday, 21 August 1973
Page: 127

Outlays not allocated to specific functions comprise payments to the States not elsewhere classified in this Statement, natural disaster relief, interest payments on the public debt, and provision for the August 1973 salary increases.

A.   PAYMENTS TO STATES NEC AND NATURAL DISASTER RELIEF

This item comprises general revenue assistance to the States, State Government Loan Council programs, assistance related to State debt and natural disaster relief. Details of these payments are presented below; additional information on these and other payments to the States classified under various functional headings in this Statement is contained in the White Paper Payments To or For the States 1973-74.

(a)   Includes $160 million subsequently allocated by the States for housing programs in 1971-72. (6) Includes $167 million subsequently allocated by the States for housing programs in 1972-73.

General Revenue Assistance

General revenue assistance is untied and utilised for purposes determined by the States themselves. The financial assistance grants, which make up most of this assistance, are determined each year under a formula which takes account of increases in average wages in Australia as a whole and of the increase in population in each State.

It should be noted that year-to-year comparisons of general revenue assistance are affected by some significant changes in the arrangements under which those grants are paid. Thus, beginning in 1971-72 the grants have been reduced to take into account the transfer of pay-roll tax to the States in September 1971 while the estimates for 1973-74 reflect the reductions (amounting to SI 11. 8 million) which the Australian and State Governments have agreed should be made in view of the assumption of full financial responsibility for tertiary education by the Australian Government from January 1974.

Special grants are paid on the recommendation of the Grants Commission to so-called claimant' States (presently Queensland, South Australia and Tasmania). The Commission's recommendations for grants in 1973-74, which total $38.6 million, have been accepted by the Australian Government.

Special revenue assistance, additional to the financial assistance grants and the special grants, has been paid to the States in most recent years. An amount of $25 million for 1973-74 was agreed to at the June 1973 Premiers' Conference.

Special repayable and interest-bearing advances were made in 1971-72 and 1972-73 to New South Wales having regard to the difficult budgetary situation faced by that State in those years. No such special advances are provided for in the 1973-74 Budget.

In aggregate and after allowing for reductions in respect of tertiary education, general revenue assistance (net) is estimated to increase by 8 . 5 per cent in 1973-74 to $1 ,845 . 7 million.

State Government Loan Council Programs

At its meeting in June 1973 the Loan Council approved a total program for the State Governments in 1973-74 of $867.0 million, consisting of interest-free grants of $278.3 million to be provided by the Australian Government and borrowing programs of $588.7 million, which the Australian Government has undertaken to support.

The total program is lower than in 1972-73 because expenditures on welfare-type housing, which have previously been financed from within the State Loan Council programs, will be. financed in 1973-74 and subsequent years by advances, outside the Loan Council arrangements, under a new Housing Agreement and because of reductions to the programs on account of changed arrangements for financing tertiary education; if adjustments are made to make figures in both years comparable there would be an increase of $84.7 million or 10.4 per cent in the 1973-74 program. The relevant outlays on welfare housing and tertiary education are discussed under the functions Housing and Community Amenities and Education respectively.

Assistance Related to State Debts

Under the Financial Agreement the Australian Government pays $15.2 million each year to the States as a contribution towards interest payable on their debts and also contributes sinking fund payments. The sinking fund payments in 1973-74 are estimated to total $29.6 million.

Debt charges assistance grants are being made in accordance with an undertaking by the Australian Government to* meet the debt charges on $200 million of State debt in 1970-71 and a further $200 million each year from 1971-72 to 1974-75. Grants totalling $46 million will be made for this purpose in 1973-74.

Natural Disaster Relief

The only natural disaster relief payments, made in 1972-73 were $40,000 paid to Victoria for flood relief in the Seymour and other areas, and $27,000 expended on freight subsidies for drought relief in the Northern Territory. Further small payments to Victoria for flood relief and to the Northern Territory for freight subsidies are expected to be made in 1973-74. There are currently no other commitments that will require payments by the Australian Government for natural disaster relief or restoration in 1973-74.

B.   PUBLIC DEBT INTEREST

This heading brings together interest payments made from the budget sector to other sectors, including interest payments on government securities, and under defence credit arrangements with other countries. Interest received by Government Trust Funds on Australian Government securities held as investments and cash balances is offset against gross interest payments.

Details are set out in the following table:

(a)   Includes commitment fees on aircraft and defence borrowings.

Gross Interest Paid on Australian Government Securities

The figure for gross interest paid on Australian Government securities comprises interest on all Australian Government securities on issue except for interest on defence borrowings. It includes, interest paid on securities recorded at State Registries and also interest on advances for housing, railways and War Service Land Settlement that is reimbursed by the States to the Australian Government.

Loan Defence Acts Interest

Interest payments on loans raised in the United States for defence equipment purchases are estimated to decline by $1 . 8 million in 1973-74.

Loan Consolidation and Investment Reserve

Interest is received by the Loan Consolidation and Investment Reserve on investments in Australian Government securities which were mainly issued in Special Loans to assist State works programs.

Other

Interest is received by other Australian Government Trust Funds, including the National Welfare Fund and the National Debt Sinking Fund, on investments in Australian Government securities and cash balances.

C.   PROVISION FOR AUGUST 1973 SALARY INCREASES

Following negotiations between unions and the Public Service Board, pay increases, of 16 per cent for Second Division officers and 12 per cent for Third Division officers were offered by the Board in early August 1973. The increases become payable from 23 August 1973.

A bulk provision of $32. 5 million to cover the additions to salary has been included in Appropriation Bill (No. 1) 1973-74 on the basis that particulars of the allocation of costs to departments will be shown in Additional Estimates which will be presented to the Parliament in the Autumn Session 1974.







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