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Thursday, 14 November 1985
Page: 2168

Senator MAGUIRE —My question is also directed to the Minister representing the Treasurer. I refer to the Press statement by the Opposition's shadow Treasurer, Mr Jim Carlton, in which he called on the Government to reduce Commonwealth grants to the States. What specific implications would such a policy have for Commonwealth-State relations and, in particular, for South Australia?

Senator WALSH —I have in front of me a most extraordinary Press statement. I think some lunatic must have been issuing Press statements and putting the shadow Treasurer's name on them. The Press statement appears under the name `the Hon. Jim Carlton, MP, shadow Treasurer' and, as Senator Maguire has said, it indicates that the Commonwealth Government should not pay to the States in the next financial year the 2 per cent real increase in Commonwealth grants which was set out in the Budget Papers. I cannot believe that, even in the discordant and warring Liberal Party, the shadow Treasurer would so effectively sink a State Liberal leader during an election campaign as Mr Carlton would have sunk Mr Olsen yesterday with that statement. Therefore, I cannot believe that it is genuine.

However, in case it is genuine, it would have these sorts of effects: Next financial year Commonwealth grants to South Australia would be reduced by about $25m. Compensating increases in State taxes would be required to fill that $25m hole in the State Government's revenue. There are a variety of ways in which taxes could be increased to plug that $25m hole in revenue. By way of illustration, if car registration and drivers licence fees were increased by 36 per cent, that would provide the $25m which the South Australian Government would need if any Commonwealth government were to cut the 2 per cent real increase in funding for the State next year. Alternatively, the financial institutions duty which Mr Olsen has promised to abolish could be increased by 80 per cent and that would provide about the $25m required. In case this Press statement is genuine and Mr Olsen does not like the examples that I have put forward as to how he could plug the revenue hole, I invite him to nominate the specific taxes or State charges which he would increase to recover the $25m of Commonwealth revenue forgone.