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Thursday, 14 November 1974
Page: 2379

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

The purpose of this Bill is to authorise the payment of capital grants to the States in 1 974-75 totalling $326,618,000. This amount represents the grant component of the State governments' Loan Council programs for 1974-75 and is equal to 32. 1 per cent of the total programs excluding the temporary allocation of $9,919,000 for Queensland for flood restoration purposes- the same percentage share as in 1973-74. The Bill also provides for the payment of capital grants in the first 6 months of 1975-76 up to an amount equal to one half of the 1974-75 amount pending passage of similar legislation in that year. Payments authorised under this Bill may be made from the Consolidated Revenue Fund or from the Loan Fund, and appropriate borrowing authority is included.

Following arrangements settled at the June 1970 Premiers Conference, the Australian Government undertook to provide, on a continuing basis, a portion of the State Government's

Loan Council programs in the form of interestfree grants in lieu of what would otherwise be borrowings by the States, in order to help the States finance capital works, such as schools, police buildings and the like, from which debt charges are not normally recovered. The savings to the States in debt charges arising from the capital grants are estimated to have totalled $74.8m. to the end of 1973-74, and to amount to $59m. in 1974-75.

At its meeting in June 1974, the Loan Council approved programs for the State Governments totalling $934,919,000, consisting of a basic program of $925,000,000 and a temporary borrowing allocation of $9,919,000 for Queensland to finance the additional cost of restoring flooddamaged assets to above their pre-flood standard and to cover the cost of re-siting and constructing new assets to replace old assets destroyed or abandoned because of flood damage. In September 1974 the Australian Government proposed and the State Governments agreed that the basic program should be increased, by 10 per cent, to $1,017,500,000. This increase is to be formally approved at a subsequent meeting of the Loan Council.

The basic program for 1974-75 takes into account estimated capital expenditures of which the States would be relieved in that year as a result of the Australian Government's assumption of full responsibility for financing tertiary education from 1 January 1974. The reduction for 1974-75 agreed at the June 1973 Premiers Conference /Loan Council meeting is $65.4m. These arrangements complicate comparisons between 1973-74 and 1974-75 but when adjustments are made to take these differences into account the 1974-75 basic program for each State is 20 per cent greater than the 1973-74 program. The basic program of $1,017,500,000 is made up of borrowings totalling $690,882,000 and capital grants to be provided by the Australian Government of $326,6 1 8,000.

At its June 1974 meeting the Loan Council also approved an increase of $70m, or 12.4 per cent, to $636,084,000 in the borrowing programs for State authorities classified as 'larger' authorities for this purpose. In 1973-74 these were semigovernment and local authorities whose individual borrowings for the year exceeded $400,000. For 1974-75 the Loan Council agreed to increase this amount to $500,000. There is no overall limit on borrowings of authorities whose individual borrowings amount to $500,000 or less. The larger authorities program includes a permanent addition of $10,000,000 to the New

South Wales allocation and temporary allocations of $9,584,000 for Queensland for restoration of flood-damaged assets to above their pre-flood standard and $6,000,000 for Western Australia under arrangements made between the Australian and Western Australian Governments.

Overall, the funds available to the States and their authorities in 1974-75 for capital purposes from Loan Council borrowing programs, Australian Government general purpose and specific purpose payments and from estimated borrowings by smaller authorities are estimated to amount to over $3,390m or about one-third more than in 1973-74. Of this amount, the Australian Government will provide or support more than $2,579m or over 40 per cent more than in 1973- 74. Further details concerning the Loan Council programs of the States and their authorities for 1974-75 may be found in chapter III of the Budget document 'Payments to or for the States and Local Government Authorities

1974- 75'.

Turning to the details of the Bill, clause 3 authorises the payment of grants to the States totalling $326,618,000 in 1974-75 and clause 4 authorises the Treasurer to make advance payments in the first 6 months of 1975-76 at the same annual rate as in the current financial year. The amounts for each State are set out in the Schedule to the Bill. Under clause 5 of the Bill payments may be made either from Consolidated Revenue Fund or Loan Fund and clause 9 provides for the necessary appropriation of these funds. The extent to which the payments will be met from Loan Fund will depend on borrowings during the year, which cannot be estimated in advance. Clauses 6 and 7 of the Bill authorise the Treasurer to borrow funds in the period from the commencement of the Act to the end of December 1975, up to the total of the amounts of the grants payable in 1974-75 and in the first 6 months of 1975-76. This borrowing authority will be reduced by the amount of any borrowings made before the commencement of this Act, under the authority of the States Grants (Capital Assistance) Act 1973, which may have been used to finance grants made in the first 6 months of 1974-75. I commend the Bill to the Senate.

Debate (on motion by Senator Cotton) adjourned.

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