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Wednesday, 16 August 1972
Page: 242

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

That the Bill be now read a second time.

The purpose of this Bill is to amend the States Grants Act 1971-72 to give effect to revisions to the financial assistance grants arrangements agreed between the Commonwealth and the States at the Premiers Conference held in June this year. These revisions take 3 forms. Firstly, it was agreed that an amount of $112m would be added to the financial assistance grants payable to the States in 1972-73 and be built into the formula grants so that it would escalate in future years in accordance with the formula laid down in section 7 of the present Act. The amount of $112m is to be distributed between the States in proportion to the 1971-72 formula grants as escalated in 1972-73 under the formula. This method of distribution of the grants was decided on so as to exclude the effects of the adjustments to the financial assistance grants which are accompanying the transfer of payroll tax from the Commonwealth to the States. If the effect of these adjustments were not excluded, the distribution would differ significantly from the basis settled at the June 1970 Premiers Conference.

Secondly, it was agreed that the additional grants of $2 per capita which were being paid to New South Wales and Victoria each year would be increased to $3.50 per capita in 1972-73 and that these amounts would also be added to the formula grants so that they would escalate in future years. This change is estimated to increase the grants payable to New South Wales and Victoria in 1972-73 by approximately $7.1m and $5.4m respectively. Under the procedures of the Commonwealth Grants Commission the 3 States which receive special grants on its recommendation - namely Queensland, South Australia and Tasmania - will thereby proportionately benefit from these increased grants to the 2 most populous States. Thirdly, it was agreed that a special temporary addition of $3. 5m would be made to the financial assistance grants payable to Western Australia in 1972-73.

The total effect of these 3 increased payment revisions will be to add SI 28m to the financial assistance grants that would be produced in 1972-73 by the arrangements embodied in the existing legislation. The addition to the grants in subsequent years will, of course, be greater as a result of building the major part of this amount into the formula grants. I ask leave to have incorporated in Hansard a table showing the analysis State-by-State of these additional grants.

Mr DEPUTY SPEAKER (Mr Hallett)Isleave granted? There being no objection, leave is granted. (The document read as follows) - '


Mr GARLAND - Turning to the details of the Bill, clauses 1 and 2 are of a purely machinery nature. Clause 3 authorises the first 2 of the 3 forms of additional grants agreed to at the Premiers Conference, that is, the additional grants of $112m to be divided between all the States and the additional per capita grants to New South Wales and Victoria. The clause takes the form of an amendment to section 7 of the present Act. This section authorises the formula grants, which constitute the main body of the grants payable under the Act. lt provides that the formula grants payable to each State in each year shall be calculated by taking the grant paid under the section in the previous year and increasing it in proportion to the increases in the State's population and in average wages in Australia as a whole, and by a betterment factor of 1.8 per cent. The payment of these additional grants under this section thus automatically ensures that they will be built in to the formula grants and escalated in future years.

Clause 4 repeals section 8 of the existing Act which authorises additional grants of $2 per capita to New South Wales and Victoria. These grants are to be replaced by the additional grants of $3.50 per capita provided for in clause 3 of the Bill. Clause 5 provides for the payment of an additional temporary grant of $3.5m to Western

Australia in 1972-73 by increasing the additional grant of S6.5m payable in that year under section 9 of the existing Act to SI Om. The additional grants authorised by this Bill represent the second major permanent revision to the general revenue assistance arrangements settled at the June 1970 Premiers Conference, the other being the transfer of payroll tax and accompanying adjustments to the financial assistance grants agreed at the June 1971 Premiers Conference. The arrangements settled in June 1970 themselves represented a very substantial improvement compared with previous arrangements.

In addition, over the 2 years 1970-71 and 1971-72 the Commonwealth provided special revenue assistance totalling $1 15.5m, the bulk of which was paid for the purpose of assisting the States overcome budgetary difficulties caused by abnormally large increases in wage and salary awards. These excessive wage and salary award increases had the effect of pushing the States' finances out of balance. The permanent increases in the grants payable which this Bill seeks to authorise should contribute substantially towards overcoming the financial problems of the States. Taking into account all the changes in the revenue assistance arrangements that were decided at and since the June 1970 Premiers Conference, it is estimated that in 1972-73 the States will receive over $420m Commonwealth general revenue assistance more than they would have received had the arrangements which existed before 1970-71 continued unchanged. I commend the Bill to the House.

Debate (on motion by Mr Crean) adjourned.

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