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Wednesday, 10 November 1976

Mr Kevin Cairns (LILLEY, QUEENSLAND) -Mr Deputy Speaker,I have 10 minutes in which to make my contribution. I am always delighted to be able to speak on a Bill to approve the allocation of funds as determined by the Commonwealth Grants Commission. I have been especially delighted to be able to do so over the last 5 or 6 years. It was a long battle to get Queensland to become a claimant State and to go to the Grants Commission, as it did, from 1 965 to 1 97 1 . It is rather a paradoxical fact of life that the last State to become a claimant State before the Grants Commission is the only one remaining as a claimant State before the Commission now. I would not suggest that that position will remain for too long on the Australian economic scene. I suggest that, before many years have elapsed, Tasmania, South Australia and, in certain circumstances, Western Australia will look once again at the Commonwealth Grants Commission. I believe that they ought to look at it rather more quickly than they might be inclined to indicate at the moment.

The Commonwealth Grants Commission has existed for more than 40 years. It is an economic body which always deserves a quite special tribute because there is no other institution or economic mechanism like it in any other federation in the world and there is no other economic mechanism anywhere in the world which has been so successful, by its efforts, by its advice and by its investigations, in developing horizontal equality among the various parts of a nation. By that I simply mean that the characteristics of Australia in this respect may be described in this way: There is less difference, in terms of living conditions and standards, expectations of standards and the services to which people have a right as citizens of a State, between people living in different parts of Australia than exists between people in any other country. I believe that this is a very great tribute to bodies such as the Commonwealth Grants Commission.

The Government obviously has felt that the Commission is important, as the Grants Commission represents the fall-back position for the new federalism on which the Federal Government depends. We all know that in any new arrangement a great deal of political footwork is required. A great deal of political footwork is operating at present under the new federalism and under the proposed new federalism. So it will always be. But the neutral corner to which the States will be able to go and where they will be able to make their appeals is occupied by the Commonwealth Grants Commission. I hope that this body continues and that it continues in its present form.

For various Australian States, the Commonwealth Grants Commission has been a boon over many years. It was a boon for Tasmania in the 1930s. It was a boon for South Australia in the 1930s, the 1940s and most of the 1950s. It was a boon for Western Australia for many years. Some States have come into the Grants Commission; other States have withdrawn from it. But it has always been acceptable. I believe that it is a tribute to this House and to the Parliament that no grant recommended by the Grants Commission has ever been questioned and that legislation seeking to enact such a grant has always been passed without any attempt at amendment. In its way, that fact is a tribute to the nature of federalism in Australia as well as a tribute to this House.

I believe that a quick passing comment has to be made upon the new technique for determining the grants which is involved in the report with which this legislation is concerned and the previous report. The new technique for determining the assistance which the Commission has divined, if I may put it that way, has been to examine in each category of revenue that is available to a State- such as betting taxes, land taxes and payroll tax- the revenue effort of the claimant State compared with that of the standard States. In addition to that, the new method involves determining the expenditure required in a claimant State for it to have standards of schools, hospitals, or whatever, similar to those in the standard States. So the expenditure effort is determined. Those efforts are averaged in order to determine the grant that is to be given to the State. That is a different technique from and is rather better than the one that was utilised for many years, in which the Budgets of the standard States were compared with those of the claimant States. Budgets were adjusted appropriately. Budget expenditures of claimant States that were hidden or that were loaded were taken out of or added to those Budgets so as to make them comparable with those of the standard States. So, a deficit per person in a claimant State was adjusted to be similar to a deficit per person in a standard State.

It is worthwhile dwelling on those 2 methods for one or two moments, for the simple reason that as long as the Budget method was utilised States could always say that a determination of the Grants Commission resulted in it imposing its own conditions on a claimant State. As I recall, for many years Treasurers of Western Australia were most adept at saying: 'We do not want to raise this tax, but the Grants Commission has told us to raise it. It examined our Budget. We are a claimant State before the Grants Commission. We are raising the tax not because we want to do it but because the Federal Treasurer in Canberra is causing this to happen through the people whom he has appointed to the Grants Commission are who are saying that we should raise this tax'. That was always a nonsense argument. The new method of calculation introduced by the Grants Commission at least strips the availability of a propaganda exercise of that type from any State Treasurer. I believe that that is very good.

I point out, as a piece of history, that there was a famous Treasurer in Tasmania, Dwyer-Gray, who held that office for many years. He built his whole political ethos and campaign on being able to belt the Federal Government as Treasurer of a claimant State. Any pressure that was on him to raise State taxes was always blamed on the Grants Commission and the Federal Government. It so happened that very many years ago hearings of the Grants Commission concerned with Tasmania were held in capital cities other than Hobart because the Grants Commission was too frightened to go to Tasmania and retreated from holding hearings there. At least those days have passed, and the excuse and the mechanisms which were available to a State Treasurer to pursue such a propaganda campaign have passed from the scene also.

In the short time that is available to me, I wish to make several points and one or two suggestions. It may be thought that the Grants Commission, being concerned with developing equality among the States, does all the investigations that are necessary. It does not. It deals only with fiscal equalisation- an equalisation in terms of public services available from public moneys. I suggest that one reason which has given rise to that misunderstanding is that people think that the Grants Commission deals with total equalisation among the States. That is not so. It cannot deal with total equalisation among the States insofar as it does not deal with tariffs and those distributions of resources in Australia that derive from the external affairs power. In the early 1930s, the Grants Commission wanted to look at tariffs. There was insufficient evidence for it to do so. I suggest that, with the help of the Industries Assistance Commission, it ought to look at the redistribution effects which come from tariffs and quotas in Australia and it ought to see what exporting parts of Australia are enabling high standards of living to be attained, pursued and retained in those parts of Australia where most of the work force is protected by tariffs and quotas. This is a valuable mechanism, and the Grants Commission ought to be invited to look at that aspect. I hope that some of the States which give evidence to the Grants Commission will require it to look at that.

The second point I want to make- in 30 seconds- is that the Grants Commission does not look at the equalisation of monetary conditions among the States. I request the Reserve Bank to consider looking at the equalisation of monetary conditions and volume of money among the States so that when there is a great change in the volume of money in Australia some States are not squeezed much more than others and some States are not allowed to enjoy a much more lax position than others. That would be a matter for the Reserve Bank, but it falls with the purview and the kind of consideration which is available to the Grants Commission. I intended to talk about other aspects, Mr Deputy Speaker, but I dare not do so, because a little later I would like to say something about Fraser Island. I hope that the Grants Commission continues. It should continue. It is a quite unique institution which exists only in the Australian federal scene. Insofar as it is able to widen its purview and consider equalisation not only in terms of fiscal matters but also in terms of those transfers of resources that go with the possession of the trade power and in terms of the transfer of monetary responsibilities so as to equalise those between one part of Australia and another it could have a welcome widening of its own present activities, which are extremely valuable to Australia and of which I would suggest in the immediate years to come more States than one will be very anxious and very ready to take advantage.

Question resolved in the affirmative.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

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