Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Tuesday, 15 September 1987
Page: 102


Mr HOLDING (Minister for Employment Services and Youth Affairs and Minister Assisting the Treasurer)(8.09) —I move:

That the Bill be now read a second time.

The main purpose of this Bill is to amend the States (Works and Housing) Assistance Act 1985 so as to authorise payments in 1987-88 arising out of decisions, taken at the 25 May 1987 Loan Council meeting, which fall outside the provisions of the Financial Agreement Act 1928. Specifically, this Bill seeks to authorise:

the payment of general purpose capital grants to the States in 1987-88;

the prepayment of capital grants during the first six months of 1988-89, pending passage of similar legislation in that year; and

the alteration of the amounts that may be nominated by the States and the Northern Territory from the borrowing component of their Loan Council programs for the purpose of public housing in 1987-88.

It also makes provision for each State and the Northern Territory to provide a certified statement as to the expenditure of funds nominated for the purpose of public housing.

Capital Grants to States

Since 1970-71 a portion of the State governments' Loan Council programs have been provided by the Commonwealth as interest-free capital grants. The grants were introduced to help States finance works, such as schools and other capital works, from which debt charges are not normally recovered. The effect of these grants, therefore, is to relieve the States of those debt charges-that is, interest payments and sinking fund contributions-which they would otherwise have to pay, and the grants accordingly have a substantial beneficial effect on the overall financial positions of the States. In addition, there are no conditions attaching to the manner in which the grants are applied by the States. In the 10 years prior to 1985-86 the grants represented one-third of the State governments' Loan Council programs. In 1985-86 and again in 1986-87 the portion of the programs provided as a capital grant was temporarily increased by 7 per cent to approximately 35.7 per cent, with the loan portion being reduced by an equivalent amount.

For 1987-88 the Loan Council agreed that the grant component of the State governments' Loan Council programs and equivalent general purpose capital assistance to the Northern Territory as a whole should be one-third. However, due to changes in the distribution between the States and the Northern Territory agreed at the Loan Council meeting, the proportion of the program provided as a capital grant will vary slightly from State to State. The total amount to be provided to the States as a capital grant is $176m out of a total program of $533m.

Public Housing Nominations

The arrangements whereby the States and the Northern Territory are able to nominate part of the borrowing component of their Loan Council programs for public housing were introduced in 1982-83. The arrangements have contributed considerably to the financing of public housing in the States and the encouragement of the States to increase their own housing expenditures. As a condition of the payment of these funds, a State or the Northern Territory must be able to meet its matching requirements for the purposes of the Housing Assistance Act 1984. Subject to that, the nominated funds will be provided to the States and the Northern Territory at the loan terms and conditions set out in the Commonwealth-State Housing Agreement, and hence will bear interest at the concessional rate of 4 1/2 per cent per annum and will be repayable over 53 years.

At the Loan Council meeting on 25 May 1987 it was agreed that the States and the Northern Territory would be allowed to nominate the whole of the borrowing component of their programs for public housing in 1987-88. This Bill seeks to give effect to those decisions. Should the States and Northern Territory nominate the maximum amounts allowed under this Bill, $414m will be provided to them as loans on concessional terms for public housing.

Statement by State in Respect of Public Housing

The Bill provides that the States and the Northern Territory will be required to provide the Commonwealth with certified financial statements detailing the expenditure of loan funds nominated for public housing. This change will formalise existing reporting arrangements already agreed to between the Commonwealth and the States, and is consistent with those applying to assistance provided under the Housing Assistance Act 1984. This Bill forms an important part of the Commonwealth's overall financial assistance to the States and the Northern Territory and I therefore commend the Bill to the House and present the related explanatory memorandum.

Debate (on motion by Mr Porter) adjourned.