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Wednesday, 12 April 1972
Page: 1518

Mr GARLAND (Curtin) (Minister for Supply and Minister assisting the Treasurer) - -I move:

That the Bill be now read a second time.

The main purpose of this Bill is to authorise the payment of a special advance grant of $9m to Queensland in 1971-72 in accordance with the recommendation of the Commonwealth Grants Commission contained in its report on Queensland's application for such a grant which has already been tabled. Special grants are paid by the Commonwealth to financially weaker States, to compensate them for such factors as lower capacity to raise revenue and higher costs in providing government services of a standard similar to those in the financially stronger States. When special grants were first paid they were the only regular form of general revenue assistance paid to the financially weaker States for this purpose. The main way in which special compensatory assistance is now provided is through the higher per capita financial assistance grants paid to the four less populous States. The financial assistance grants are, of course, the main general revenue grants te the States. The special grants may, therefore, be regarded as supplementing the financial assistance grants, but as having the special characteristic of being independently and expertly assessed by the Commonwealth Grants Commission.

Up to 1959, South Australia, Western Australia and Tasmania received annual special grants on the recommendation of the Grants Commission. South Australia withdrew from the special grants system as from 1959-60 and Western Australia as from 1968-69, but Tasmania has continued to apply for a special grant each year.

At the June 1970 Premiers' Conference the then Prime Minister indicated that each of the four less populous States was free to apply for a special grant on the recommendation of the Grants Commission should it believe that its financial assistance grant Was too low relative to New South Wales and Victoria, which were granted additional grants of $2 per capita at that Conference. South Australia applied for, and received, a special grant in 1970-71, and continued as a claimant State this financial year. Queensland applied on 30th September 1971 for a special grant for 1971-72, bringing the number of claimant States at present to 3.

Normally the States make their applications for special grants well before the beginning of each financial year, and the Commission then makes its recommendations in time for the necessary legislation to be passed in the Budget session. Thus the special grants to South Australia and Tasmania in 1971-72 were authorised by the States Grants (Special Assistance) Bill 1971 passed last year. Because of the timing of Queensland's application, the recommendation by the Commission concerning that application has become available only recently.

The method used by the Grants Commission, briefly put, is to calculate grants which will bring the claimant States' budgetary positions up to those of the States taken as standard - at present New South Wales and Victoria - after allowing for differences between the States concerned in their financial practices and in efforts to raise revenue and control expenditure. This involves a detailed comparison of the standard and claimant States' budgetary revenues and expenditures.

The payments of special grants recommended by the Grants Commission consist of 2 parts. One part - known as the advance grant' - is based on an estimate of the claimant State's financial need in the current financial year, and is subject to adjustment 2 years later when the Commission has compared in detail the Budget results and standards of effort and of services provided in that year for both the claimant State and the States which it takes as standard. The other part represents the final adjustment to the advance grant made 2 years earlier and is known as the 'completion grant'. It may result in the final grant in respect of that year being higher or lower than the original advance payment. Thus, the amount of $9m recommended by the Commission for payment to Queensland this year will be subject to adjustment in 1973-74.

The Commonwealth Grants Commission's assessments of advance grants are based on necessarily approximate estimates of the claimant States' financial needs in the current financial year. In this instance, the assessment is even more tentative than usual because Queensland is a newly claimant State and the Grants Commission has not yet had the opportunity of making a detailed examination of Queensland's financial practices compared to those of the standard States. Details of the bases on which the Commission reached its decision, including summaries of submissions put to it by Queensland and by the Commonwealth Treasury, are set out in its report.

The present Bill is very similar in form to previous legislation authorising the payment of special grants by the Commonwealth to the States. Clause 4, it might be noted, authorises the Treasurer to make payments to Queensland in the first 6 months of 1972-73 up to a maximum of $4.5m, which is half the grant payable this year. The purpose of this clause is to enable monthly payments to be made in the early months of 1972-73, in accordance with normal practice, against any special grant which might be recommended by the Commission, and approved by Parliament, for payment to Queensland in that year. Since the inception of the Commonwealth Grants Commission its recommendations have always been accepted by the Commonwealth Government and by Parliament and the Government considers that the present recommendation should also be accepted. I commend the Bill to the House.

Debate (on motion by Dr Patterson) adjourned.

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