EMBARGO: CHECK AGAINST F 76/ 124
DELIVERY ~ J) USWAI tAL
FOR PRESS .13 JUNE 1976
ELECTORAL TALK
Last weeks Premiers' Conference was one of the most
significant ever held.
It was significant. for two major reasons.
First, it broke new ground in the way in which both State and
local government will share Commonwealth tax revenue in future.
State and local government will receive major elements
ofE their financial entitlements automatically in future.
Second, the conference was significant in that decisions
were made during a crucial period of Australia's economic
recovery. Spending in the public sector over the past few years has run
away from reality.
The Commuonwealth was spending too much of peoples' earnings.
The States had come : 0 expect too much from the Commonwealth.
They promised new programmes without having the resources to
pay for them. They : hen expected the Commonwealth to foot
the bill.
At the JPremiers-.. Conference the Government made it clear that
it was standing firm in its resolve to reign in spending.
The Government made it equally clear that all States had
the same responsibility. Our purpose was to protect the
taxpayers of Australia..
The Commonwealth-Gorernuentxalonez-cannot cre te cono-Pills.
It needs the support of States and citizens.
Figures show that growth in State bureaucracies and in-spending
levels were generally just as high as the Commonwealth.
There was little indication however that the States had been
prepared to act with the same economic responsibility as we
believe we have shown in the last six months.
They now understand they have a great responsibility to slow
their own growth back to realistic levels. If that doesn't
happen, taxes can only go on being increased. And taxes
are already too high. 2
However even allowing for the necessary restraints
in money allocation the States will receive an extra
16.4 percent in money terms, in this forthcoming year.
This is a substantial increase.
It will cover reimbursement grants, loan programmes,
semi-government loan programmes, payments to local government*
and welfare housing.
The Gov. ernment stressed that the overall 16.4 percent increase
was as nuch as the nation could afford at this time.. Wc
pointed out that our concern is to protect taxpayers.
All Government programmes have to be paid for by a tax on
individuals.
The Government also put it plainly that when high unemployment,
high inflation and high interest rates are running together
that you simply-cannot buy your way out of the problem.
Countries that have tried, this have added to inflation and
added to unemployment.
Some people have looked at our new Federalism proposals
merely as a device for providing States with extra money.
This view underestimates what Federalism is all about.
I
It * s designed to give the States greater flexibility
in how they spend Czznonwealth money.
It is designed to : ve States greater responsibility for
their own activities.
If they want more money for programmes they are going-to
have to go to the pezple and ask for that money.
And they will have justify spending that money.
No longer will the States be able to hide behind the back
of the qommoziiealth for their failure to keep promises
or for their failure to meet the needs of the people.
Victoria's Premier ( Mr Hamer) is resolute in his support
for this ideal. He wants responsibility for the money he spends.
Those Premiers-who have attacked---this-: concept have-not been
prepared to accept the responsiblity that Government brings.
They have wanted the cash and the kudos but not the responsibility.
One of the most important matters finalised at the Premiers'
Conference was the arrangement that will make local government
a real partner in the Commonwealth's Pederalism reforms.
Local government will be part of the tax sharing reforms which
will set a new pattern in Commonwealth/ State financial arrangements.
In future, a fixed percentage of personal income tax
will be earmarked for distribution through: the States
to local government.
This is a vital change. Municipalities and shires throughout
Australia will be able to calculate their annual revenues
with greater certainty. As a result they will also have very
much greater independence of action.
In 1976/ 77 the first year of the new arrangements
the Commonwealth will provide a total of $ 140 million in
general revenue assistance to local government authorities
throughout Australia. This is an increase of $ 60 million
or 75 percent over the amount provided by the former Government
last year under the old arrangements.
The Premiers' Conference agreed on the State by State
distribution of this financial assistance for local government.
It is now up to the States to urgently make sure that every
local. council is now made aware of its entitlement.
The finance decisions taken at the Premiers' Conference
were made with one major thought in mind that is, the control
of inflation.
Until inflation is overcome there is not going to be the
kind of reinvestment in the productive capacity of Australia
that we would want.
And until Australia can demonstrate it is getting on top of
inflation, businessmen are going to stand off and be wary. of
new investment. Unless there is new investment there are
not going to be the kind of productive jobs that are required
in Australia.