PRESS OFFICE TRANSCRIPT FRIDAY, 29 JUNE 1979
PRESS CONFERENCE: FOLLOWING PREMIERS CONFERENCE
( LATE AFTERNOON)
Tape begins as follows:
Prime minister
I think there was a very keen disappointment that the matter
was again held up today.
The Governments of Victoria, South Australia and Tasmania
and the Commonwealth have decided to establish an inquiry into
an integrated south east Australian electricity power group,
through co-operative enterprise and to see whether better
planning arrangements will enable this to take place.
For example, one of the matters that will be discussed is the
prospect of linking up the Victorian and South Australian
grids at Mt.* Gainbier. The prospect of a major aluminium
smelter in Western Victoria makes this all the more sensible
than might otherwise have been the case. Tasmania is involved,
because as we know, the ready availability of hydro-power is
diminishing in that State; much less than it was. Now there
are those who are beginning to look and perhaps in the longer
term to plan for a power link from Victoria to Tasmania.
Tasmania actively wanted to be involved in this particular study.
The Commonwealth is involved because of its general concern,
even though these matters are in the prerogative of the States.
The three States and the Commonwealth hope that N. S. W. might well
join the study at some future time. Because quite plainly,
it makes a great deal of sense, especially a bit close to the
State boundaries, to plan the development of power sources and
supply and lines and development in an integrated way.
Why N. S. W. is unwilling to take part at this stage I don't think
I or the other Premiers quite understand that. This matter was
first raised by the Commonwealth with Victoria and South Australia
I think two or three years ago. But in any case, the States that
I have mentioned South Ai~ stralia, Victoria and Tasmania, ana
the Commonwealth will now be launching that study so that there
can be the best possible planning and use of resources.
The other element of the decision was that there was a general
desires amongst Premiers in future years to discuss road funding
in the Premiers Conf erence rather than with the functional
Ministers. They also wanted to have an opportunity of discussing
education funding. The Commonwealth has offered not resistance
to that at all. These matters will broad in the ambit of the
discussions with the Premiers.
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Prime Minister-( continued)
All in all, I think it has been a highly successful conference.
I know Premiers didn't get all the funds that they hoped. I am
not sure that their disappointment was as great as might sometimes
be evident from the words they use. But on the financial matters,
it is always a question of Premiers asking for more and the
Commonwealth having to hold the line. on those particular matters
it is not really an evenly weighted conference in terms of
numbers. I don't think I have yet seen a Premier arguing that
less money should be spent on a particular matter. That makes
a free flow of debate difficult on that sort of issue.
On the other matters those ones that I have just mentioned
on industrial relations, on energy co-operation, but particularly
on the Seas and Submerged Lands Act, on all of these it is has
been a highly successful conference and one that will advance'
sensible and co-operative arrangements between the Commonwealth
and the States.
I particularly emphasise the practical matters comi ng out of
the Seas and Submerged Lands Act. I don't think we generally
realise the difficulty that that posed for States, and in a
sense for the Commonwealth, as a result of the High Court decision
because the normal authority of States and their administration
was thrown into jeopardy. It has been vitally important that
practical and sensible arrangements, governing and co-ordinating
State activities offshore, should be introduced and maintained.
Now, in relation to mining and fisheries and navigation and
pollution, and in Marine Parks and a number of other matters
there are navigation matters there are a set of agreements and
there will be a set of joint authorities which have really
established a historic pattern.
Again, I express my appreciation for the work officials and
Ministers, especially involved, have done in achieving this
advance. Question Sir Charles Court has put out a statement saying that you have
in fact agreed to restrictural veto concerning offshore mining
and the Commonwealth veto in the national interest.. What is your
position regarding that veto.
Prime Minister
Well, it is a question of the mechanism in which it will be
used. The joint authority will be established in Western Australia.
Applications will go to the West and I can well understand
Sir Charles not wanting people applying to somebody in Canberra
for a matter that is going to involve development off the
Western Australian coast. But, if there is disagreement in
relation to it, that disagreement would go to Ministers. It would
then, if necessary', be reported by Minister to Cabinet and in
the end would be settled on a Prime Minister to Premier level.
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Prime minister ( continued)
It has been indicated in the agreement that we would only want
to go against the views and wishes of the State in these
particular matters if it was contrary to the national interest.
You would have to judge circumstances as they arose. You can't
postulate a set of circumstances and then fit particular
applications into a neat box. It won't work that way.
I think the arrangement is a practical one. Even though there
had been an agreement with all the other States they saw the
codicil to the agreement, in a sense, with Western Australia and
they were happy with that modification on the part of the West.
They didn't want the modification adopted in their own joint
authorities. But I think it is a very good result. There are
some special circumstances in the West because of distance,
because it is a great mining State without the industrial base
of some others.
Question
Was there any agreement on the tax sharing-formula to take
effect from June of next year.
Prime Minister-
I made it quite plain that the Commonwealth does not approve of
the present guarantee; it was a limited guarantee and that: that
guarantee could not continue. At the same time we expressed
a willingness to have ongoing consultations with officials to
see whether some arrangements can be devised that would assist
the States. Now the main reason for that guarantee or the
fact that it is not acceptable to the Commonwealth is that in
terms of Government expenditure it is of a kind that just can't be
sustained. In the days when Government expenditure was expanding
it wasn't maybe of all that much importance. But a three percent
factor, which means three percent i . iore in real terms
each year, year after year, being built into payments for the
States, was a very large amount indeed. In days when Governments
need to restrain expenditure they can't expect to get three percent
more in real terms year after year. of course, the fact that that
guarantee now applies I think to all States but one is really a mark
of the extent to which the Commonwealth has in fact reduced taxes.
The figures didn't emerge in the Premiers Conference but if this
year we had been taxes on the basis of the earlier Hayden scales
we would have collected $ 3,000m more in this particular financial
year. The States would have got 40 percent of that, which was
percent of $ 3000 m" about $ 1200 million. Now that just
indicates the extent of and success of efforts to reduce personal
taxes. That's obviously had an impact on the 40 percent tax
sharing arrangements with the States and is one which they are
not All that pleased with. Again, when the original proposals
were introduced, there was a staqe two. We have legislated for
stage two which would give the States the right to add on a
surcharge or to allow an additional rebate to reduce taxes further
within their own States. Now I think it has become pretty plain
over a passage of time that the States are unwilling to accept
that additional responsibility for their own affairs. The Canadian
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Prime Minister ( continued)
States have that additional responsibility. They exercise it
both ways; heavier taxes or lower taxes in the Canadian Provinces.
But the Australian States have indicated that they won't want to
have that particular responsibility even though it would never
have meant separate tax forms and all of th~ at. -People would still
be paying one tax. Alright, if the States don't want to do that,
that's their decision. But they can't expect us to pick up the
difference for them by imposing additional taxes on their behalf,
because we are just not going to do it. Now all of that I think
has been made very plain to the States. But against that background
we are prepared to examine the arrangements to see if some
arrangements which in our view are financially responsible can
be made that would in part meet the wishes of the States for a
greater degree of certainty. Officials will work and examine that
and it is envisaged that there will be a Premiers Conference before
the end of this year on industrial relations. This matter will be
picked up at that Conference.
Question_
You said virtually that they are going to get a lot less next year.
Did that break up the Conference with an air of bitterness.
Prime Minister
No. I think there was a great deal of goodwill in this particular
conference. I was speaking to a number of Premiers after it was
all over and during the course of the afternoon it was a very
good natured meeting with one or two very minor exceptions.
The point I made was that it would enable there to be much better
balance in the total financial arrangements because quite plainly
if the tax reimbursement formula hadn't-been increasing 13% to 14%,
L9 if that increase had been less, then-it would have been possible
to adopt a much more relaxed attitude in relation to capital works.
That would have led to a better balanced result overall.
That was the point that we made in particular with the Premiers.
Question Could I just ask the Treasurer a question please. Why did the
Government decide this week to over-turn its mini-budget decision
on hospital operating costs.-Where do you expect to be able to
recoup the additional $ 130 million approximately that's effectively
foregone by this decision this week.
Mr. Howard
The decision that was taken and announced in the mini-budget,
if I correctly recall., the words were that we should, having
announced our desire to have an inquiry, we would seek to hold
expenditure at the same level. It wasn't an explicit statement
by the Government that it was going to spend " 1X" million dollars
in meeting half the net operating costs of hospitals during 1979/ 80.
It was an expression of what we would seek to do. I don't really
think you can categorise the decision ultimately taken as being
an over-turning of that decision. We hadn't made a firm decision
on how much we would contribute. That's why the May 24 statement
Mr. Howard ( continued)
was couched in those fairly general words. The amount that we
have agreed to contribute is an increase in money terms what
you've mentioned I think $ 130 million or in that order. But is
about $ 54 million less than the States asked for. Bear in mind
that we are in the business of trying to persuade the States
to have an inquiry into one of the areas where we think there has
been major wastage and where we believe there is a desire on the
part of the States when they stop playing politics on the subject,
particularly the State of to have a very serious inquiry,,
Whilst there could have been a contribution to those costs which
was less than what has in fact been made, I think in all of the
circumstances we've made the right decision on it. It's just not:
correct to say that that it represents no determining of decision
which we hadn't made at the time of the mini-budget, the final
decision on how much we'd contribute.
Question
On the tax-sharing formula once more, do you think that it is
unreasonable to the Commonwealth purely because of the betterment
factor or is it also because the share itself is too much?
Prime Minister
I think the betterment tax is a very significant element but there
is another element in it also which would give us cause for concern
and that's the extent to which the States have compensated for Wage
changes and that, and you know we mentioned that in relation to
New South Wales legislation to be what is ultimately going to be
a 35 hour week in the power industry and I think, that that action
coupled with New South Wales Government's court for the State A. WI. U.
has been significant in helping to cause the degree of industrial.
unrest in New South Wales at this very time. Because they expect:
the New South Wales Government to pick up, or the Tribunal's not
going to give them what they want, the New South Wales Government-.
can do it by legislation and it's going to take a long while to
work that out of the scene in New South Wales. We said at that time
when they legislated for the power industry that we'd be looking at
some mechanism to make sure that the States were not automnaticall~ y
compensated for wage adjustments. There's been a very uneven support
for restraint in wages before the Arbitration Commission in the first
quarter in the six-monthly hearings and again, why should the States
be concerned, they don't have the major responsibility for inflation,
for the economy and they were going to be compensated anyway for
wage increases. So, it's not only the betterment factor, the wage
element will be another serious element but I don't think one sho-uld
necessarily assume that something like that particular guarantee
will replace what's there now, but in a different form. We've said
that officials can look at it, and they will in good faith, but
there is no indication that, you're quite wrong to assume that there
will be any particular result. Options are wide open on that. The
one thing that is firm and that's the, in our comparing this with
sister States, is the 39% of income tax and examinations about the
guarantee to see if there are alternative ways of doing something;
that would in part, help the States but which in the Commonwealthl's
view would be financially responsible. ./ 6
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Question Prime Minister, has Cabinet considered the OPEC price rise and
what's the Decision?
Prime Minister
Mr Newman is making a statement very shortly, if it hasn't already
gone out and I'd prefer to leave it with him. The Decisions were
made some days ago in relation to the various matters covered in
Mr Newman's statement but no announcement will be made until we
knew the extent of the OPEC price rise.
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