P. M. iNo. 6GG/ 1967
P13MI7' NF T1A3C 7~ ANDF LOAN4 COUNCIL MV12TING
' tatem,, ntby the Frtme? Kiinister, the Rtt. Hon. Harold Holt, M. P.
De: cisions taken -at the. Loan Council rneetin.'. and Premie--rs'
conf -r--nce which concluded today provid a for substantial incr-ease: s
in 1967-! 5t in the! funds available to the States and their authoritdes
for their capital viorks activitie s, and also for an increase 5), ayond what
existing( arraniments would have produce d in financial assistance
grants from the % Commonwealthto the State-s for their general Oudg etary
purpos es.
Funds for Capital " orks Activities
In 1906-67 funds available to th? States and their authorities for
capital -3xpenditures und-: r borrowiin-, programmes approv--d by the Loan
Council and fromi specific purposa capital payments by the Commorw e-alth
for roads, Universiti--s, rail standardisation and so on% will total
approximately 411, 24A--million, mad? up as followis: $ million
Etatea works and housing programmeas 64 3
Semi -gov-ernmental I-orrowing progamrn s26
Local authority borrowing programme--s ( a0 7C2
Total Loan Council Prograrnme-s23
Cpe-cific purpos e-capital payments 7157 ( b)
ka) !:. uthorities ? borrovin-$' 1esCCC or less in a ye ar.
Thtinate
The Coi-alonw-e: alth put b.-fore the States proposals which would have
produc ~ d an incre ase in the total funds available to State s and th-ir
aut'horitie s from these sources in 1967-63 of about 10 per ce-nt.
As a re sult of th: e discussions with the: States, howve: r, the
prospe ctive incre! ase is nowi estimatad at n. arly 13" j pe-r cent.
T-he Comrcionwaalth agree! d to support a borrowinig programme for
S'tat works and housinng purnoses in 1067-60 of $ 677 million. This is ' 32
mllion more taan the: V1966-67 programme.
It was also agreed that the total borrowing programmes of
' semi-governmental" authorities in the Stata. should be $ 311 million
in 1967-60, or $ 43 million riore than the 1966-67 programm.
It was also decided that there would ba no limit on the overall
level of borrowings by State authorities which borrow less than $ 300, 0CW
in a year. This means that authorities which had previously proposed
to borrovi between 21C, Ca0n d $ 300, CC a year will no longer have
to be accommodated in the States' ' semi-governmental' borrowinZ
programm s. Consequantly, the smi-rov ernmental" borrowing
programme will now be shared by a smaller number of authorities. In
addition, those authorities whosea borrowin3s have been less than
$ rC3, C00 will, with the approval of their State Premiers, be able to
increase their borrowings up to a maximum $ 30, 400 without coming
within the ' semi-govarnmental borrowing programme-s.
The estimates the States had prepared envisaged " local
authority' borrowings of about $ 73 million in 1967-68. As a result of
the increase in the limit to $ 300, CC0 it seems highly likely that
borrowings by local authorities as now defined will be considerably
hiTher in 1967-63.
The Commonwealth also agreed to provide direct financial
assistance to Tasmania in respect of the financing of its hydro-electric
programme associated with developments in the Gordon River area.
Takin,-account of this, Commronwealth specific payments to the States
for capital purposes are estimated to increase by about $ 73 million in
1967-60. Thus the funds available to the States and their authorities in
1967-63 for capital works purposes under the Loan Council ' orrowing
programmes and from specific purpose capital paymert s are now
estimated to total about $ 1,430 million. That will be close to $ 160
million or almost 13 per cent mrore than in 196-67.
7inancial Assistance Grants
The Frirnme linister recall. d that, at the February 1907 Fr cmi rs'
Conference, it vwas agreed to alter the grants formula used to calculate
the financial assistance grants so as to reduce the time lag before
increases in average v! ages are reflected in the grants. It was also
agre-d to pay the Ctates a special, non-recurring grant of $ 5 million.
The effect of the decisions taken at the February Premiers'
Conf erence was that the States received a total of $ 026.6 million by way
of financial assistance grants in 1966-67. This was $ 11. 9 million more
than they would have received if the previous formula had continued
to operate and if no special grant had been paid.
At the -remiers' Conference just concluded the Commonwealth
agreed that for purposes of calculating the financial assistance grants
for 1967-6C ( and for future years) the amount of million paid to the
States in '% 63-67 be treated as an addition to the formula grants for that
year. After taking account of this addition of $ 5 million to the base for
d etermnining the 1967-63 grants, it is tentativ ly estimated that the
formula grants payable to the States in 1967-7T will be about $ 900 million.
This would be an increase of about $ 73 million, or about C. 9 per cent,
on the total gants actually paid in 1966-67.
( The final figure of the forimula rants will depend on the
movement in average wages for the twelve months ended Miarch, 1963
and on the increase in each State's population betw: een D: ec ember, 1966
-3-
and December, 1967. These will not be mown until towards the
end of the 1967-62 financial year.
Commonwealth payromnts to the States in 1967-63 other
than the financial assistanc grants and specific payments for capital
purposes are also expected to show some net increase.
Total Capital and Revenue Funds
As a result of existing arrangements and decisions taken at
the Premiers' Conference and Loan Council iMeeting, the total funds
available to the States in 1967-53 from Commonwealth assistance and
from borrowings for works programmes of the States and their
authorities will be of the order of $ 2,450 million compared v. ith about
200 million estimated to have been receiv ed from these sources
in 1966-67. This would represent an increase of about 11 per cent.
CA NBe, C
June, 197.
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