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Premier's Conference a test of keating government's bona fides

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Senator Jim Short


Tomorrow's Premiers' Conference is a major test of the Keating Governments bona fides. It will show whether the Prime Minister has any resolve to constrain the Commonwealth's own-purpose spending. The signs to date are not encouraging.

Since 1982-83 there has been a -real reduction of 7.7% in total payments to the States and Local Government. During the same period the Commonwealth's own spending has increased in real terms by 39.6%. For almost a decade the Commonwealth has been squeezing the States but has not had the will or ability to rein in its own spending. Indeed, in the late 1980s when the Commonwealth

Budget went into surplus, it cut payments to the States rather than its own spending to contribute to this outcome.

The real cut of 7.7% in payments to the States, compared with a real increase of 39.6% in the Commonwealth's own spending, reflects the highly centralist, Canberra knows best1 ideology of the Prime Minister/former Treasurer. Any passing of Commonwealth powers to the States has been resisted at all costs. Mr Keating sees such a move as ‘one of the gravest dangers we face as a

Commonwealth1 . Now he has been joined by a new Treasurer who also wants to hold all the financial levers of power.

Under Labor, Commonwealth/State relations are determined on the basis of 'more power for Keating' rather than an efficient and sensible division of functions and the interests of average Australians.

In sharp contrast to Labor, the Coalition will reform Commonweatth/State relations to allow the States to make more of their own decisions on taxing and spending to reflect local priorities. We are committed to genuine federation in which the States have a major role. We are committed to the full cooperation and involvement of the States in the far-reaching changes which must be made to Australia's infrastructure if we are to be competitive on international markets.

When it comes to economic management, the Prime Minister is quick to blame the States for the increase in their levels of debt, yet he has been unable to control his Governments own spending. With his O ne Nation/one job' statement he now feels the need to buy votes for the forth-coming election. This totally irresponsible attitude to economic management is clear from the blowout in this financial years Budget deficit, which began at a forecast $4.7 billion and - despite warnings from the

Coalition and independent economic analysts - is now forecast by the Government to be a massive $9.3 billion.

The starting point Commonwealth Budget deficit for 1992-93 is presently forecast to be $10.5 billion, which is a measure of the Governments dangerous economic incompetence. When this is added to the combined States and Territories' projected budget deficit of approximately $7.3 billion in 1992-93, the size of the total public sector funding requirement is likely to drive up interest rates and choke an

emerging recovery.

The spotlight is now on the Prime Minister to show that his Government recognises the need to reduce the Commonwealths call on our national savings and therefore cut substantially the starting point deficit for the coming Budget

Melbourne 11 June 1992



For further information contact Senator Short on 03-387 4177