FOR PRESS: PM No. 42/ 197 1
PREMIERS' CONFERENCE
Statement by the Pr! ime Minister, Mr. William McMahon
There have been frank discussions today between the State Premiers and the
Commonwealth Treasurer ( Mr. Snedden) and me relating to the financial position of the
States during the Budget year 1970/ 71.
Unanimous agreement has been reached on amounts of special additional
financial assistance to be provided to the States by the Commonwealth in respect of that
year. There was agreement about the need for continued strong resistance to the
inflationiary trends in public authority expenditures on goods and services but at the
same time recognition by the Commonwealth of the difficulties confronting the States
in financing their prospective Budget deficits for 1970/' 71.
The Premiers laid great stress upon the need to reduce their prospective cash
deficits which still remain despite the measures they had taken since February to improve
their financial positions,
With this in mind, the Commonwealth offered additional revenue assistance in
1970/ 71 of $ 43 million. This would be distributed between the States in proportion to
the financial assistance grants ( see attached table).
The Commonwealth's offer was unanimously accepted on the firm understanding
that this additional assistance would be used to reduce the States' revenue deficits and not
to increase expenditure in 1970/ 71 above that following the measures recently taken by
the States. Following the latest revision to the estimated increase in average earnings for
the twelve months ended March 1971, the grants to which the States will nowbe entitled
under the financial assistance grants formula for 1970/ 71 have been revised upwards by
6 million. Taken with the $ 43 million special assistance offered by the Commonwealth,
this increases the revenues available to the States in 1970/ 71 by $ 48. 6 million.
Although there has been some preliminary discussion of the financial problems
likely to be facing the States in 1971/ 72, to which I briefly referred in my opening
statement ( copies have been circulated), it was also unanimously agreed that it was not
practicale to proceed to any definitive proposals about the States possible cash requirements
at this Conference. These questions will be taken up again between the Commonwealth
and the States at a further meeting towards the end of this financial year.
I welcome the degree of co-operation shown between all the Premiers an d
the Commonwealth. I feel it was an example of the sensible working of Commonwealth/
State relationships.
April 1971
PROPOSED ADDITIONAL ASSISTANCE TO THE STATES 197J-71
million
Proposed Speial Revenue Assistance ( a) Estimated
Additional F inancial
A ssistance
Gra nt s ( b) Total Additional Assistance
New South Wales
Victoria Queensland South Australia
Western Australia
Tasmania Total 14. 1
10.6 6.6 4. 6
5.0 2. 0
43.0 1.9 1. 4
0.9 0. 6
0, 6
0.2 5. 6 16.0 12.0 745 5.2 5. 6
2.2
48.6
Total of $ 43 million divided between the States in proportion to
their estimated financial assistance grants, including additional
grants of $ 2 per head to New South Wales and Victoria, of
$ 12. 5 million to Western Australia and of $ 103 million to
Tasmania as well as the additional grants to Queensland resulting
from the $ 2 million addition to its base.
That is, additional to the estimates last supplied to the States
on 11 March. The estimated additional grants result from a
recent upward revision to the estimate of the increase in average
wages in the year ended March 1971 from S. 25 per cent to
8. 75 per cent. The final estimate of the increase in average wages,
and hence of the grants, is still subject to considerable uncertainty.