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Tuesday, 1 October 1974
Page: 1505


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

Table 7

 

 

Bochm. E. A. and Wade. P. B. 'The Anatomy of Australia's Public Debt'. Economic Record. Vol 47 No. 1 1 9. September 1971.


Senator BAUME - These tables show the debt structure of the Commonwealth, the States, semi-government bodies and local government bodies both in dollars and in terms of percentage share of government debt. The important fact which emerges from the tables is that between the years 1940 and 1970 the Commonwealth debt rose from $870m to $3,884m. At the same time its share of total indebtedness dropped from 27 per cent in 1940 to 18.6 per cent in 1970. If we move across to the column which concerns us today- semi-government bodies- we find that their indebtedness has gone up during the same period from $35 lm to $6,024m. During this period we find that semi-government bodies have been asked to bear an increasing proportion of the debt burden of our country. In percentage terms the debt increased from 10.8 per cent to 28.9 per cent and during the same period the Commonwealth debt has been reduced further. Against this background it becomes intolerable to consider the kind of financing offering which is against the promise to give grants. The kind of finance provided will be in the form of loans which will add markedly to the burden which people have to bear because, in the end, people have to pay back this money.

The States had considerable doubts about the Government's program when it was first put up. They were aware of the fact that one of the few things the Australian Government had increased was the bond rate. Because the bond rate has been increased the money which the States are being asked to borrow is even more expensive than it has ever been before and the interest rate which the States are being asked to pay now represents a very considerable repayment. In the Sydney Morning Herald' of 23 November 1973 there was a statement by the New South Wales Minister for Public Works, Mr Punch, when he was discussing the proposals which the Whitlam Government had put up at that stage with regard to loans of money for sewerage works. Mr Punch stated:

I thought the Prime Minister really meant grants. It is disappointing, to say the least, that he is now offering the States repayable loans at the long term bond rate. This is a record 8V4 per cent . . . The simple fact is that we cannot provide sewerage facilities economically under the terms the Federal Government proposes. '

Mr Punchsays that the Government cannot provide the facilities economically. I remind honourable senators of the Prime Minister's promise that money would be made available to allow the States to provide these services economically. Mr Punch talked about the repayment provision. He said that under the proposed scheme if New South Wales borrowed $1 1.2m it would have to pay back in interest and principal $llm in the first 10 years. At the end of that time there would still be $7m owing on which the New South Wales Government would continue to pay %Vi per cent. In the event the Prime Minister and the Government late last year elected to lengthen the loan period. But even that does not alter the fact that the Government has gone back on its promise. It is now lending money at its own kind of interest rates, rates which people cannot really tolerate.

Other comments have been made on this Bill. One which is worth reporting was made in the Queensland Parliament by Mr Lickiss, a member of the Legislative Assembly. He stated that the offer made by the Commonwealth would result in a doubling of the sewerage rate payable by householders in his region. That is what the loan means. It has to be paid back sometime or other. In fact, it is no service to the people of Queensland, New South Wales or of any other State to have their debt burden increased in this way when, at the same time, the Commonwealth is reducing its share of the debt burden. This is inequitable sharing. The debt burden is being thrown back on the people in what, in fact, is a fairly regressive manner. It is another example of the Federal Government's advantaging itself at the expense of the States and the semi-government bodies, and in the long run, at the expense of the people.

We heard this morning of the purchase of a painting for $650,000. If even that small amount of money were put into the loan situation it would save the State repayments of about $50,000 a year in interest. At present that has to be repaid by the average citizen. It is a question of priorities, of where you look to place your resources and how you decide these things should be done. Sydney has a very comprehensive plan for the provision of water and sewerage services, particularly sewerage services. It was drawn up 4 years ago by the Metropolitan Water Sewerage and Drainage Board and envisages the complete sewering of Sydney by 1982. The setting up of this enormous undertaking required a lot of forward planning involving consultants and the lining up of contractors as well as appropriate decisions about inflationary rates.

In the implementation of this plan in the first 2 years of the Federal Labor Government it was found that materials and labour could not be obtained. Now that materials are available they cannot get the financial backing necessary. They certainly cannot afford to borrow large amounts of money at a bond rate of 8.5 per cent. Plans have been prepared for primary, secondary and tertiary treatment works that are so badly needed in Sydney, together with surface treatment works, submarine outfalls for the coastal areas and complete treatment works for inland areas. Some inland parts of Sydney already have treatment works in operation. At St Mary's the treatment works is providing effluent of a higher quality than the water into which it is flowing, determined by the biological oxygen demand as the measure of the worth of the water. New South Wales has a very good program for the next 8 years if only we can get money on reasonable and just terms.

I am informed, as Senator Carrick said in his speech, that our Metropolitan Water Sewerage and Drainage Board as at 30 June last had an indebtedness total for loans and advances of $855,741,166. All that amount has to be serviced every year by the householders of Sydney. If the Government is going to help with sewerage works let it provide some real money. Let it make some grants. Let it give that kind of money that will enable capital works to proceed without adding to our load. We are already in enough trouble. Senator Carrick has made a number of positive suggestions and I want to second them. We should have a program which we know will extend over 3, 5 or 10 years so that our appropriate boards can plan ahead, so that they can work out in advance what their needs will be and set up a coherent program.

We want non-repayable grants and a program similar to the one undertaken by Mr Gorton to reduce the debt burden at present falling on semi-government bodies. Let us not forget that they bear 28 per cent of the debt burden at present. It is a disproportionate amount and is unfair to them. In particular I want to address myself to the relief of interest payments and progressive debt redemption. I appeal to the Minister. Anything his Government will do to aid semi-government bodies will be appreciated because it is the ordinary person who pays rates who will benefit in the long term. For every taxpayer's dollar more capital works will be possible when the money is not directed to interest servicing.

The Prime Minister (Mr Whitlam) made a speech in north Queensland 4 days after the Budget was introduced. Speaking to the Australian Labor Party Regional Council he had the effrontery to say: 'Is it centralist to provide the States with record grants for . . . sewerage?' It may or may not be centralist, but the fact is that the Government did not provide grants for sewerage. It is like a money lender putting himself up as the people's friend. It is like a salesman urging someone to buy on hire purchase. If the Government wants to spread election propaganda about grants, let it deliver when the time comes. I would like to conclude by reminding the Senate that on 23 January of this year we received from the Minister for Urban and Regional Development (Mr Uren) an endorsement of what we are saying. In a Press statement released on that date he said:

The Australian Government is concerned about the debt burden accrued by sewerage authorities over the past 20 years. The Government is examining ways progressively to eliminate it.

If Mr Uren and his Government have that concern, if they care about the ability of semigovernment bodies to survive in terms of the function they have to serve, let them do something about it. Let them make a gesture to the States and the semi-government groups. Let them offer grants and take some positive action to reduce the accrued interest load and the indebtedness. We will support any such measures and their program would be a lot more credible if they would take such action.







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