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Thursday, 28 November 1974
Page: 2915


Senator COTTON (New South Wales) - The States Grants (Capital Assistance) Bill 1 974 is not opposed by the Opposition. It is a straightforward measure. It contains some very interesting areas that would be available for discussion, but I shall not take a good deal of time on this. There has been an assessment of the position which relates to the grant of $326m in round figures being equal to 32.1 per cent of the total programs. It is the same percentage share as in the year 1 973-74. It is possible to criticise the fact that this might well have been capable of being increased but certain adjustment processes have taken place in regard to tertiary education and other matters that have to be allowed for in these calculations. It pays, as it normally does, regard to the fact that capital grants in the first 6 months are paid at equal to one-half of the 1974-75 amount.

As is, I think, known fairly broadly the Commonwealth by an earlier initiative during the time of the previous Government made arrangements to do some funding of State and Loan Council operations in the form of interest free grants in order to supplement what otherwise would be a borrowing by the States. I believe that was an extremely useful and sensible thing to do at the time. When one had regard to the total Australian debt it became quite clear that the share of the debt which belonged really directly to the Commonwealth had diminished substantially whereas the share of the debt which was ostensibly in the hands of the States had increased markedly. When one looks at the construction of that position in the overall concept that Australia's overseas debt had hardly increased at all in 20-odd years, one sees that the real burden of debt structure has changed from the Commonwealth to the States and the State budgets therefore have a substantial problem in meeting the interest burden of those expanding State debts brought about largely by their infrastructure and all kinds of activities involving schools, roads, hospitals, health programs and that sort of thing.

One could make a very useful argument some four to five years ago that the time had come for the Commonwealth to assume some of that interest debt burden or, alternatively, to pick up part of the debt. The decision was to pick up some part of the interest burden, and that has been done by making money available in interest free form. I do not want to delay the Senate at this late stage in the year by embarking upon a long debate on this process. But I am of the view that the time has come- and the Senate may well be a good place in which to do this- to make a relatively calm examination of the total Australian Government debt structure and the interest burden on that debt structure in order to ascertain whether or not it is not possible to have a better system of distribution of debt and interest on the basis of the overall revenue of the States and the Commonwealth and the overall disbursement. In this way we could see whether there might not be more efficiency, a better distribution and really a better sense of responsibility if some of these things were adjusted.

One does not need to go into that matter in a great deal more detail. In the second reading speech there are some references to the details in chapter III of the Budget document 'Payments to or for the States and Local Government Authorities 1974-75 '. There are some relevant details on page 145 of the document for earnest students of this matter. The whole document itself is very impressive. On page 145 there is a table showing the total payments and Loan Council borrowing programs by the States set out in context and how they have moved relatively through time and through a kind of pattern of change. Of course, there is a disparity when one makes a comparison with population. For instance, in 1973-74 the State of New South Wales received $288.84 per head of population, the State of Western Australia received $435.78 per head of population and the State of Tasmania received $565.15 per head of population. This is inevitable in a situation in which some States are smaller than others and have less opportunity for raising revenue than others. Some financial adjustment has had to be made as between those States themselves and the Commonwealth.

I just express the general view that in the Australian scene with which we are dealing there is a fairly substantial case for the whole Australian financial scene to be looked at with rather new eyes. The general position that I take in this matter is that which I elaborated in 1971 and, I think, ever since in the great hope that one day somebody will seek to do something positive in the Australian Federation on financial and monetary management, rather than standing off and shouting at each other, which I think has been inimical and not at all useful for the total Australian community. I argue very simply along these lines: This is a Federal system historically and geographically but equally sensibly. This is the sort of country that ought to operate under a well constructed Federal system. It is not a wise thing to try to turn history, geography and commonsense into a unitary position. The country is not suited for it, and its people are not suited for it. So what becomes extremely important is for men of goodwill in government, wherever they may be found, to seek to make the Federal system work efficiently.

The general approach that I have proposed for a long time now- and I shall continue to propose it in the hope that one day we will have a change of government and we can introduce it, because that is our policy, or the people now involved in government may see some wisdom in this approach- is that there ought to be a properly constructed national economic and works council. It ought to consist of the Prime Minister and the Premiers who should meet regularly in alternate capital cities in rotation. They should discuss the total Australian economic and monetary program and the capital works program together as Australians interested in their country. They should try to bring the total demand of all governments back into some relation to the available resources. There would not be a voting process because that could be hostile to getting what you need, which is some kind of broad consensus. That economic and works council would have 2 groups of advisers: The Commonwealth and State Treasurers and their officials, and the Commonwealth and State works program people and their officials. It would introduce the clement of consultation into the community regularly on the same basis as sectoral responsibility is accepted by the New Zealand Development Council.

What we should try to do is to get the Australian governments totally to work together in the hope that out of that the Austraiian people would see leadership in the governmental sense. It is in that kind of construction that I believe you would be able to examine in the broad Australian context the whole of the Australian debt position, the whole of the Australian interest burden falling on that debt position, and the relative positions of the debts between the States and the Commonwealth. You would do this on the basis that what Australia has to do is to get its governments to work together and give a lead in order to try to bring the total demand of governments into some sensible relationship with the available resources. I make a strong case for that. I observe in passing that I personally have been extremely distressed to see the Prime Minister of Australia adopting towards the State Premiers an attitude which seems to me to be quite hostile and really quite useless. When I see him going around the world preaching brotherly love, I wish that he would apply some of that feeling towards the running of Australia in a better sense of the full family responsibility of the nation.







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