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Wednesday, 21 September 1983
Page: 1051

Mr HURFORD (Minister for Housing and Construction and Minister Assisting the Treasurer)(11.05) —I move:

That the Bill be now read a second time.

The main purpose of this Bill is to authorise payments in 1983-84 arising out of two decisions taken at the recent Loan Council meeting which fall outside the provisions of the Financial Agreement Act 1928. These decisions were, firstly, to continue the arrangements whereby part of the annual borrowing program approved by Loan Council for State government purposes is provided by way of grants; and, secondly, the arrangements introduced in 1982-83 which allow the States and the Northern Territory, once they have met certain conditions, to nominate part of their approved borrowing programs as being for public housing purposes which they can then receive on concessional loan terms and conditions. As a result, this Bill seeks to authorise the payment of, firstly, general purpose capital grants to the States and, secondly, such loans on concessional terms and conditions as the States and the Northern Territory nominate from their approved 1983-84 borrowing programs as being for the purposes of public housing.

The Bill also provides scope for the payment of capital grants and concessional housing loans in the first six months of 1984-85. The amounts to be advanced under these provisions are limited to an amount equal to one-half of the grants to be paid in 1983-84 in the case of the grants and an amount equal to one-half of the approved borrowings in 1983-84 in the case of the concessional housing loans.

Grants amounting to $489.7m, equal to one-third of the approved Loan Council programs for the States in 1983-84, were agreed to at the June-July 1983 Loan Council meeting. These grants are to be made in accordance with revenue assistance arrangements originally adopted at the June 1970 Premiers Conference. Under these arrangements it was agreed that the Commonwealth Government would provide a portion of the States' Loan Council programs as interest-free non- repayable grants instead of what would otherwise be interest-bearing borrowings by the States.

The effect of the grants is to relieve the States of 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 States' financial positions. 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 States are, however, entirely free to apply these grants as they choose.

The Bill also provides for the continuation of arrangements introduced last year whereby the States and the Northern Territory are able to nominate part of their approved borrowing programs for public housing. As a condition to the payment of these funds, the Bill contains a provision that a State or the Northern Territory must be able to meet its matching requirements for the purposes of the Commonwealth-State Housing Agreement. After a State can demonstrate its ability to meet this condition, the funds so nominated 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 highly favourable rate of 4 1/2 per cent per annum and will be repayable over 53 years.

The object of providing concessional loans for public housing is to provide an incentive to the States to increase the amounts that they would otherwise direct to public housing. This is in addition to the direct funding under the Commonwealth-State Housing Agreement, which is being increased to $500m in 1983- 84, an increase of 50 per cent on the amount provided in 1982-83 by the previous Government. Moreover, the whole of this increase is being provided in the form of grants. Together, these measures should result in a significant increase in public sector housing activity in 1983-84.

The assistance being provided under this Bill forms part of the State governments' new money programs for 1983-84 as approved by the Loan Council and the analogous general purpose capital payments to the Northern Territory. In 1983-84, these general purpose capital funds amount to $1,598m, an increase of 7 per cent over the amounts for 1982-83. When these funds are combined with the very strong growth in Commonwealth specific purpose payments, it is estimated that total net Commonwealth capital payments will increase by around 16.1 per cent in 1983-84. In addition, the States will benefit from an increase of 15.4 per cent in their larger semi-government non-electricity borrowing program, while electricity authority borrowings in 1983-84 are expected to be slightly above their very high 1982-83 level.

Overall, the Commonwealth is providing a significant increase in funding to the States and the Northern Territory this year to assist them with expenditure on capital projects. This should provide the basis for continued growth in real terms in State and local government authorities' capital expenditures following the strong growth in 1982-83. This Bill forms an important part of the Commonwealth's overall finance assistance to the States and Northern Territory. It is therefore with great pleasure that I commend the Bill to the House.

Debate (on motion by Mr Steele Hall) adjourned.