PREMIERS' CONFERENCE, 16TH FEBRUARY, 1967 6// 0 ' I 9
Commonwealth-State Financial Relations
The discussion at the Premiers' Conference today
covered a wide range of matters affecting Commonwealth-State
financial relations. It was agreed that consideration of longer-term
questions would be resumed at the Premiers' Conference to
be held towards the end of the current financial year. In
the meantime, however, the Commonwealth put forward certain
proposals which were designed to provide further assistance
to the State Budgets in 1966/ 67.
Details of these proposals, which were accepted by
the States, are attached.
PREMIERS' CONFERENCE2. FEBRUA RY 1967
Financial Assistance Grants
Statement by-the. Commonwealth
Present Formula Under the States Grants Act 1965 the financial
assistance grant for each State for each financial year of
the present grants arrangements is determined by taking that
State's grant for the previous year ( with the addition of
$ 2 million each year in the case of Queensland) and:-
Increasing it by the percentage change in the
Population of that State during the year ended
31st December of the year of payment;
The amount so obtained under is increased
by the percentage increase in average wages
for Australia as a whole fot the financial year
immediately preceding the year of payment; and
The amount so obtained under is increased
by a betterment factor of 1.2 per cent;
Proposed Formula It is now proposed that, in future, the inicreasq in aveW
wages used in calculating each ye'ar's grants ( including . the
grants for the current financial year) should be the increase
for the twelve months ended March in th~ k year of payment.
Thus, the time-lag before movements in Wages are reflected in
the grants will be reduced from one year to three months. The
other elements of the formula will remain' unchanged.
The effect of this proposal on the amount of the
financial assistance grants for the current financial year
cannot be calculated precisely until figures showing the
increase in average wages for the twelve months ending 31st
March 1967 become available. On present indications, it is
estimated that the increase in average wages will be about
5.25 per cent or possibly 5.50 per cent. The effect on this
year's grants using each of these figures is as follows:-
Financial Assistance Grants, 1966-67
Smillion
Estimate of Estimates of Grants under Proposed
Grants Formula with Reduced Time Lag
State under
Present Assuming 5.25% Wage Assuming 5.5% Wage
Formula Increase Increase
Increase on Increase
Present on Present
Grant Formula Grant Formula
Grant Grant
New South Wales 272. 9 275.6 2.7 276.33.
Victoria 206.0 208.0 2.0 208.5
Queensland 123.8 125.1 1.3 125.3
8outh Australia 93.5 9440.9 94.7 1.2
Vestern Australia 85.0 85.8 0.8 86.0
tasmania 34+. 2 3450.3 34+. 6o.
TOTAL I815.4+ 823.4+ 8.0 825.4+ 10.0
Further Addition for 1966/ 67
The Commonwealth is also prepared to make available
to the States an amount of $ 5,000 000 as a special non-recurring
addition to the grants payable under the formula in 1966/ 67.
This amount will be distributed among the States in the same
proportions as the grants produced by the formula.
The approximate distribution of this amount among
the States is set out below:-
State Amount
New South Wales 1.68
Victoria 1.26
I Queensland .76
ISouth Australia ΓΈ 57
Western Australia .52
Tasmania .21
TOTAL 5.00
Total Financial Assistance Grants 1966-67
) n the assumption that average wages will increase
by 5.25 per cent in the twelve months to 31st March, 1967
the total financial assistance grants payable to the States
in 1966-67 under these proposals are estimated as follows:-
Financial Assistance Grants 1966-67
million
Existing Formula
New South Wales
Victoria Queensland South Australia
Western Australia
Tasmania 272.9 206.0 123.8 93. 5
85.0 34.2
815.4 Addition from
Reduction in
Time-Lag
2.7 2.1
1.2 0.9 o. 8
0.3 8.0 Special Addition 1.7 1.3 0.8 0.6 0.5 0.2 5.0 Total 277.3 209.4 125.8 94.9 86.3 34.7
828.4