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Tuesday, 18 April 1972
Page: 1151


Senator Sir KENNETH ANDERSON (New South Wales) (Minister for Health) (4.30) - I move:

That the Bill be now read a second time.

The purpose of this Bill is to amend the States Grants Act (No. 2) 1971 to authorise the payment to the States in 1971-72 of further special revenue assistance totalling $15m. At the Premiers Conference and Australian Loan Council meeting on 14th February the Commonwealth and the States agreed to a series of measures under which the States and their authorities would receive additional funds totalling some $85.8m in 1971-72. The measures comprise increases in the States' works and housing programmes, increases in the States' semi-government borrowing programmes, additional grants for the relief of non-metropolitan unemployment, the additional revenue grants provided by this Bill and a special loan to New South Wales to assist that State with its budgetary difficulties.

The increased Loan Council programmes are covered in some detail in my second reading speech on the States Grants (Capital Assistance) Bill (No. 2) 1972. The Commonwealth is providing the increased unemployment relief grants with the specific purpose of increasing employment in non-metropolitan areas and it supported the increases in the borrowing programmes also with the object of stimulating employment as well as enabling the States and their authorities to carry out additional public works, particularly in urban areas. The grants authorised by this Bill are for the purpose of assisting the States' revenue budgets, and the States may use them either to increase expenditures or to improve their budget results as they individually decide.

This assistance will be additional to the special assistance of $40m which the Commonwealth agreed to provide in 1971-72 at the June 1971 Premiers Conference. That increase is authorised in section 10 of the States Grants Act (No. 2) 1971. As with that assistance, the present additional grants are not included in the base grants for the purpose of calculating the formula grants for 1972-73 and subsequent years. As with the earlier $40m, the present $ 15m is to be distributed between the States in the same proportions as the financial assistance grants payable to them in 1971-72 under the States Grants Act (No. 2) 1971, but before making the adjustments to those grants which are accompanying the transfer of pay-roll tax to the States. Since the amounts of these grants will not be finally determined by the Commonwealth Statistician until towards the end of the financial year, each State's share of the $1 5m is not known precisely at this stage. However, the approximate amounts payable to the States are as follows: New South Wales,$5m; Victoria, $3.7m; Queensland, $2. 3m; South Australia, $1.6m; Western Australia, $1.7m; and Tasmania, $0.7m - a total of $15m.

It became clear during the discussions at the Premiers Conference that New South Wales had in prospect a much greater budgetary problem in 1971-72 than any of the other States. The Commonwealth therefore agreed to provide a special loan of $17. 5m to the State this financial year in order to enable it to avoid taking extreme measures to improve its budgetary position. The terms and conditions of the advance will be similar to those attached to the advance of $10m made to Victoria in 1969-70. With the concurrence of the Senate, I seek leave to have the terms and conditions incorporated in Hansard.

The DEPUTY PRESIDENT (Senator Davidson) - Is leave granted? There being no objection, leave is granted. (The terms and conditions read as follows) -

TERMS AND CONDITIONS OF THE SPECIAL ADVANCE OF $17.5m TO BE MADE TO NEW SOUTH WALES IN 1971-72

The terms and conditions of this advance, to be made to New South Wales on 30th June 1972, are as follows:

(a)   The amount is repayable over 5 years by annual instalments of $3.5m on 30th June each year with the proviso that New South Wales undertakes to repay more than $3.5m in any year if its budgetary position permits. The Commonwealth has indicated that it would agree to postpone an annual instalment if it is satisfied that the New South Wales budgetary position in the year concerned does not permit repayment to be made without deficit financing. This, of course, would not affect the requirement that the whole of the loan be repaid by 30th June 1977.

(b)   The loan carries interest at the shortterm Commonwealth bond rate of5.3 per cent offered in the February 1972 cash loan. .

(c)   No interest is payable in the first year After this, interest is payable semi-annually on 31st December and 30th June each year on the reducing balance of the loan.

Senator Sir KENNETHANDERSONThis loan will be authorised in the Appropriation Bill (No. 5) 1971-72- that is, the Additional Estimates - to be introduced later in these sittings. The Pime Minister (Mr McMahon) informed the States at the Premiers Conference that, because of revisions in the estimates of increases in average wages and State populations used in calculating the financial assistance grants for 1971-72, these grants would probably be some $20m greater than the estimates included in the budgets of the Commonwealth and the States.

Including the special assistance of $15m, but not including the special advance of $17.5m to New South Wales, it is estimated that in 1971-72 the States will receive nearly $290m in Commonwealth general revenue assistance over and above the amount they would have received had the arrangements which existed before 1970-71 continued unaltered. Thus the Commonwealth has made a very significant contribution indeed towards ensuring that the States have adequate funds available for recurrent purposes in this financial year. I commend the Bill to the Senate.

Debate (on motion by Senator O'Byrne) adjourned.







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