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Monday, 9 November 1964

SenatorHENTY (Tasmania - Minister for Civil Aviation) [8.0]. - I move -

That theBill be now read a second time.

The main purpose of this Bill is to authorise the payment in 1964-65 of special grants totalling £15,860,000 to the States of Western Australia and Tasmania. The payment of these grants has been recommended by the Commonwealth Grants Commission in its thirty-first report which has already been tabled. The Bill also authorises the payment of advances to Western Australia and Tasmania in the earlier months of 1965-66 until such time as Parliament authorises the payment of special grants for that year. A similar provision has been included for a number of years in the legislation authorising payments of special grants to the claimant States.

Under the procedures currently employed by the Commission, the special grants recommended for payment each year consist of two parts. One part is an advance payment based on the Commission's assessment of a claimant State's financial needs for the year in which the grant is to be paid. This part is subject to final adjustment two years later when the Commission has completed its examination of the audited results of the States for that year. The other part of the grant represents the final adjustment of the advance payment made two years earlier.

In accordance with its usual practice, the Commission has arrived at its recommendations by making detailed com parison of the Budgets of each of the claimant States with those of the standard States, particular account being taken of differences in levels of expenditures and efforts to raise revenue. As in the three preceding years, the Commission has taken the States of New South Wales and Victoria as the standard States for the purpose of these comparisons. The special grants which the Commission has recommended for payment in 1964-65 and the special grants paid in 1963-64 are set out in a table which, with the permission of the Senate, I shall have incorporated in " Hansard ".

In deciding the adjustments to the advance payments made to the claimant States in 1962-63, the Commission examined the Budget results of the standard States of New South Wales and Victoria and adopted an amount of 5s. 6d. per capita as the deficit budget standard to be applied in respect of that year. After comparing the level of services and charges, the Commission has recommended grants which would have the effect of leaving Western Australia with a small deficit to fund and Tasmania with a balanced Budget result for 1962-63.

In arriving at its recommendations as to the amount of the advance payments which should be made to the claimant States in a financial year, the Commission makes a forecast of the amount of financial assistance likely to be justified for the year of payment. To estimate the likely budget standard for that year, the Commission examined the budget prospects for 1964-65 of the two standard States, New South Wales and Victoria, and concluded that, on the basis of existing policies, a deficit standard for 1964-65 would be appropriate. The advance payments recommended by the Commission would, on the basis of preliminary estimates submitted by the claimant States, leave both of them with prospective Budget deficits in 1964-65.

In total, the special grants recommended for payment in 1964-65 are £4,410,000 greater than those paid in 1963-64. The effect of adopting the Commission's recommendations would be to increase by about f 7,040,000 the total general revenue grants - that is, the financial assistance grants based on the Commonwealth Statistician's latest estimates plus the special grants - payable to the two claimant States this financial year. For Western Australia the increase would be approximately £4,484,000 and for Tasmania approximately £2,556,000.

The increase of £4,410,000 in the special grants recommended for payment to Western Australia and Tasmania in 1964-65 arises partly because, on the basis of its assessment of the Budget outlook for the two standard States, the Commission adopted a much lower deficit budget standard for 1964-65 than that adopted for 1963-64. In addition, the Commission adopted a new method of comparing the levels of expenditure on social services in the claimant and standard States which has yielded a result considerably more favorable to the claimant States than the method previously employed.

The Grants Commission's recommendations have been adopted without amendment in every year since the Commission was established in 1933. The Government considers that the Commission's recommendations regarding special grants for Western Australia and Tasmania in 1964-65 should bc adopted. I therefore recommend the Bill to honorable senators.

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