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Wednesday, 20 September 1972
Page: 1004

Senator COTTON (New South WalesMinister for Civil Aviation) -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 pay-roll 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 1 970 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 Common wealth Grants Commission, the 3 States which receive special grants on its recommendation - namely Queensland, South Australia and Tasmania - will thereby 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 revisions will be to add $128m 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 for leave to have incorporated in Hansard a table showing the analysis, State by State, of these additional grants, together with the estimated total financial assistance grants payable.

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