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Monday, 17 June 1996
Page: 1586

Senator MURPHY —My question is directed to the Minister representing the Treasurer. In announcing his proposal to inflict $1.2 billion in new taxes on the states and local government the Treasurer accepted that these authorities might retaliate by imposing taxes and charges on the Commonwealth. It is, of course, inconceivable that the government would not have made prior to this extraordinary breach of faith with the states some estimates of the potential impact of such retaliatory taxes and charges on the Commonwealth's budget bottom line. Can the Treasurer's assistant confirm that such estimates were made? Can he inform us what those estimates were?

Senator SHORT —Like Senator Faulkner and others from the opposite side, Senator Murphy, you are several days out of date. The fact is that you are talking about a hypothetical situation that is now totally academic because the outcome of the Premiers Conference was that the Commonwealth, states and territories have agreed that the real per capita indexation arrangements for the financial assistance grants are going to be extended for an additional year, a significant advance on the present situation. The states and territories have agreed to make payments to the Commonwealth of $619 million in 1996-97, $640 million in 1997-98 and $300 million in 1998-99.

The Commonwealth has agreed on the other side that the need for these payments to be made will be reviewed annually at future premiers conferences in the light of the Commonwealth's fiscal position. So you are putting to me a totally hypothetical situation which does not exist and which has no relevance in the Australia of 17 June 1996.

Senator MURPHY —Mr President, I ask a supplementary question. We can at least conclude, Minister, that your government took this decision in clear breach of your election commitments without having a clue as to what the net benefit or loss to the Commonwealth might be. So on that basis, Minister, can you at least try to inform us at some later date what the estimates might have been?

Senator SHORT —I can only repeat for Senator Murphy what I said before. He is out of date. It is an academic question. The Treasurer said last week that he would expect and would be prepared to negotiate with the states and the territories if they so chose, if the sales tax arrangements had gone ahead, in terms of a quid pro quo. There was a clearly stated intent there on the part of the government. It was equally clear, I would have thought, from what the Treasurer said, that so far as the premiers were concerned he would have been prepared to look at that situation had the situation arisen and developed. The fact is you are out of date. The situation did not develop and we now have a totally different ball game.