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Thursday, 6 December 1973
Page: 2548

The PRESIDENT -Is leave granted? There being no objection, leave is granted. (The speech read as follows)-

The main purpose of this Bill is to authorise the payment in 1973-74 of special grants of $ 10m to Queensland, $ 19.9m to South Australia and $8.65 m to Tasmania. These payments are in accordance with the recommendations of the -- Grants Commission contained in its fortieth report, which has been tabled. The Bill also seeks the usual authority for payment of advances to the three States in the early months of 1974-75, pending receipt of the Commission's recommendations for that year and enactment of legislation to provide for the grants to be paid in that year.

In the last session, Parliament passed the Grants Commission Bill 1973 which widened the powers of the Commission to enable it to investigate and recommend upon applications for financial assistance by regional groupings of local authorities. Under this new legislation, which is now operating, the Grants Commission retains its previous responsibilities with respect to applications for special grants by some States. The Australian Government makes special grants to financially weaker States to compensate them for such factors as lower capacity to raise revenue from their own resources and higher costs in providing Government services of a standard similar to those in the financially stronger States. When special grants were first paid they constituted the only regular form of general revenue assistance paid to the financially weaker States for this purpose. For many years now, however, the main way in which special compensatory assistance has been provided has been through the higher per capita financial assistance grants paid to trie 4 less populous States. The financial assistance grants are, of course, the main general revenue grants to the States. The special grants may, therefore, be regarded as supplementing the financial assistance grants, and as having the special characteristic of being independently as well as expertly assessed by the Grants Commission.

The method used by the Grants Commission, briefly put, is to calculate grants which will bring the claimant States' budgetary positions up to the average of the two most populous States taken as 'standard ', after allowing for differences between the States concerned in their financial practices and their efforts to raise revenue and control expenditure. This involves a detailed comparison of the standard and claimant States' budgetary revenues and expenditures. The recommendations of the Grants Commission for payment of special grants consist of two parts. One part is based on a preliminary estimate of the claimant State's financial need in the current financial year, and is treated as an advance payment subject to adjustment 2 years later when the Commission has compared in detail the budget results, and standards of effort and of services provided, in that year for both the claimant State and the States which it takes as standard. The other part represents the final adjustment to the advance payment made two years earlier and is known as the completion payment. It may result in the final grant in respect of that year being higher or lower than the original advance payment.

The Commission has recommended that an advance payment of $10m be made to Queensland in 1973-74- the same amount as paid in 1972-73- and that no adjustment be made to the advance grant of $9m paid to the State in 1971-72. For South Australia, the Commission has recommended the payment of special grants totalling $ 19.9m, made up of an advance payment of $ 15m for 1973-74 and a completion payment of $4.9m in respect of 1971-72. This completion grant brings the total special grant in respect of 1971-72 to $ 11.9m. The relatively high completion grant reflects the fact that it was only in 1970-71 that South Australia applied for a special grant again after some years absence from claimancy, and the advance grant recommended for 1971-72 was fairly tentative.

The Commission has recommended the payment of special grants totalling $8. 65m to Tasmania in 1973-74, made up of an advance payment of $ 10m for 1973-74- the same amount as paid in 1972-73- and a negative completion grant of $ 1.35m in respect of 197 1-72. This completion grant brings the total special grant in respect of 1971-72 to $9.6 5 m. The negative adjustment in respect of Tasmania's 1971-72 grant means that the Commission considers, after detailed examination, that the advance payment of $ 1 1 m made in that year was an overestimate of the State's needs for that year. The 1973-74 advance grants to each of the three States will, of course, be subject to adjustment, if necessary, in 1975-76. The bases of the Commission's recommendations are set out fully in its report. The Commission's recommendations have been adopted by Parliament each year since the Commission's inception and the Government considers that they should be accepted on this occasion. I commend the bill to the Senate.

Debate (on motion by Senator Cotton) adjourned.

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