EMBARGO: 5. O00 pm
PRIME MINISTER
FOR MEDIA SUNDAY, JUNE 21 1981
ELECTORATE TALK
The meetings between the Commonwealth and the states on Friday
and Saturday were important and productive. I believe that
the decisions that we reached are the right ones for Australia-. as
a whole and.. for each state at this time. The decisions will
have considerable ramifications and benefits for all Australians.
Perhaps the most important issue was the level of borrowings
for Government projects. For some time the Commonwealth has
believed that in the interests of private individuals, of
home builders, farmers and small businesses, governments
should pull back on their borrowing requirements. To
understand this it is vital to realise that in the end there
is only one source of funds for borrowing. When a family
seeks a loan of some tens of thousands of dollars for a house
and when _ a _ goveinme'rt seeks -a loan fora _ few hundred million
dollars for some project that it has in mind, the funds for
both applications, if indeed sufficient funds are available,
must ultimately come from the same source, and that source
is not unlimited.
If Governments want to borrow say, $ 500 million that would
mean other things being equal, that some 20,000 fewer home
loans of $ 25,000 would be available. This example 4. q obviously
an over-simplification, but it does highlight
why the Commonwealth wants to limit borrowing by governments.
In addition the people who do get home loans in a tight
borrowing market may have to pay a high interest rate for them.
For interest rates represent the price of borrowing and as in
any other market if demand exceeds-supply the price of borrowing
money must rise.
I believe that all governments have a responsibility to seek
a balanced programme of economic development in Australia.
Each state government of course has its own particular
respbnsibilities and it is entirely proper thAt each Premier
should put his own state's case with the greatest strength.
There is healthy competition in this. The Commonwealth
Government, by its very nature, has a wider perspective. It
must consider not only its own requirements, and not only the
competing requirements of the states, but als-o the competing
demands between the private sector and government requirements
in their totality. The Commonwealth oa the overwhelming
responsibility to do whll f'is right foi; Aust'ralia as a whole.
2
I understand well that many people wish that Premiers'
Conferences could be conducted with a greater appearance of
co-operatioff.-* ut it needs to be realised that the Commonwealth's
resistznce to a number of state bids for funds and borrowings
is not a resistance designed to weaken the states and advantage
the Commonwealth, but rather to attain overall balance, and to
make sure that taxpayers generally, including small businesses
and homebuyers, have their interests protected.
An equally important item discussed at the meetings was the
Grants Commission Report on Relativities between the states,
which I referred to a few weeks ago. It is now well-known
that this report has recommended a greater share of Commonweal-th
grants for some states, including Victoria, and a smaller
share for others. The Commonwealth recognised that substantial
expectations had been built-up that some action would be taken
to give the states who would benefit from the Report's
conclusionsat least a part of what they saw as their new
entitlements. At the same time, neither the Commonwealth nor
the other states could bear the full cost of immediately
implementing substantial changes. The Commonwealth also
recognised that some states had genuine concerns about the
precise recommendations made in the report, concerns based on
doubts about the data available to the Commission, and about
the methodology it used.
The Commonwealth accordingly proposed, and the states accepted,
two initiatives that represent a responsible and equitable
approach to--the-report----First-, in recognition of the legitimate
expectations of the states whose grants would increase if the
Report were implemented the Commonwealth has provided an
additional payment for 1981-82 of $ 60 million, to be divided
between New South Wales, Victoria and Queensland. Justice
and fairness required that some payment be made to these states,
without imposing impossible burdens on the other states.
Second, in recognition of the many concerns expressed about the
Report's conclusions, it has been agreed that the Grants
Cdmmission should be asked to undertake a review of its
conclusions, with the states being given an opportunity
to present their arguments about its methodology. We
expect to receive the results of this further review as
early as possible next year.
I believe-that all states agree that this outcome is appropriate
and fair in the light of the reasonably held expectations of
some, and the equally reasonably held concerns of others.
It was also my pleasure, at the end of the Conference, to
issue a joint statement with Lindsay Thompsor announcing
that the Commonwealth will be making a gift of $ 5 million to
Victoria, as a contribution to the celebration of the
sesqui-centennial of the first settlenent in Victoria, by the
Hentys at Portland, followed a year later by the settlement
at Melbourne. The grant follows discussions with the Chairman
of the Sesqui-centennial Committee, Sir John Holland. The
Commonwealth wishes the gift to be associated with an identifiable
and suitable project aiO further discussions will be held to
determine the nature of this project.