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Thursday, 14 November 1974
Page: 2378

Mr PRESIDENT -Is leave granted? There being no objection, leave is granted. (The document read as follows)-

The main purpose of this Bill is to authorise the payment in 1974-75 of special grants of $24.7 5m to Queensland and $23.5m to South Australia. These payments are in accordance with the recommendations of the Grants Commission contained in its forty-first report on Special Assistance for States, which has been tabled by the Special Minister of State (Mr Lionel Bowen). The Bill also seeks the usual authority for payment of advances to the 2 States in the early months of 1975-76, pending receipt of the Commission's recommendations for that year and enactment of legislation to provide for the grants to be paid in that year. The Australian Government makes special grants to certain of the States to compensate them for such factors as lower capacity to raise revenue from their own resources 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 constituted the only regular form of general revenue assistance paid to the financially weaker States for this purpose. For many years now, however, the main way in which special compensatory assistance has been provided has been through the higher per capita financial assistance grants paid to the 4 less populous States. The financial assistance grants are, of course, the main general revenue grants to the States. The special grants may, therefore, be regarded as supplementing the financial assistance grants, and as having the special characteristic of being independently as well as expertly assessed by the Grants Commission. In arriving at its recommendations, the Grnats Commission makes an assessment of the financial needs' of the claimant States. To qualify these needs, the Commission compares in detail the finances of each claimant State with those of New South Wales and Victoria, taking into account differences in revenue-raising capacity and differences in the cost of providing comparable services.

This year, the Commission has used a new method for assessing the appropriate amounts of special grants and for presenting its results. This matter is referred to in detail in paragraphs 3.16 through 3.30 of its report. Very briefly, however, this new method- which the Australian Treasury has been advocating for some years- involves a more direct, and it is believed more easily understood, approach to the assessment of the grants. The method is also consistent with that adopted by the Commission in reporting on claims for financial assistance by local governing bodies. I should mention, however, that this change in method does not reflect any change in the basic principles on which the Commission operates. They remain as first enunciated in the Commission's Third Report. Nor has the change in method affected the size of the grants. It is, nevertheless, an important development in the

Commission's work, and one which the Government warmly welcomes. The Commission has continued to refine and improve its procedures in other respects. These are referred to in its report and I shall not attempt to summarise them here.

The recommendations of the Grants Commission for payment of special grants consist of 2 parts. One part is based on a preliminary estimate of the claimant State 's financial need in the current financial year, and is treated as an advance payment subject to adjustment 2 years later when the Commission has compared in detail the finances of the claimant and standard States. The other part represents the final adjustment to the advance payment made 2 years earlier and is known as the completion payment. This adjustment may be positive or negative and therefore may result in the final grant in respect of that year being higher or lower than the original advance payment.

The Commission has recommended that an advance payment of $15m be made to Queensland in 1974-75- an increase of 50 per cent on that made for 1973-74- and that a completion payment of $9.75m be paid to the State in respect of 1972-73. For South Australia, the Commission has recommended the payment of special grants totalling $23.5m, made up of an advance payment of $15m for 1974-75- the same amount as in 1973-74- and a completion payment of $8.5m in respect of 1972-73. The 1974-75 advance grants to each of the 2 States will, of course, be subject to adjustment, if necessary, in 1976-77.

Since a similar Bill was presented last year, Tasmania, which had applied continuously for special grants on the recommendation of the Commission from 1934-35 to 1973-74, has withdrawn from the special grants system following the Australian Government's agreement to pay the State an additional financial assistance grant of $ 1 5m in 1 974-7 5 , to be built into the ' base ' for purposes of calculating the State's formula grants in 1975-76 and subsequent years. This increase in the State's financial assistance grant has been provided for in the States Grants Bill 1974, which has now been passed by both Houses. In accordance with arrangements agreed between the Australian and Tasmanian Governments, the Grants Commission has not recommended a completion payment in respect of the advance grant paid to the State in 1972-73 and has agreed not to recommend a completion payment next year in respect of 1973-74; as a consequence, there is no provision for a payment to Tasmania in this Bill.

Finally, I wish to take this opportunity to refer to the retirement of the Chairman of the Commission, Sir Leslie Melville, on 30 September last and wish to place on record the Government's appreciation of his services in this and other spheres during a long and most distinguished career. Mr Justice Else-Mitchel will replace Sir Leslie as Chairman of the Commission. The Commission's recommendations have been adopted by Parliament each year since the Commission's inception and the Government considers that they should be accepted on this occasion. I commend the Bill to the Senate.

Debate (on motion by Senator Cotton) adjourned.

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