PREMIERS' CONFERENCE AND LOAN COUNCIL MEETING
JUNE 1 JULY 1983
The heads of government of the Commonwealth of Australia
and of the six states today reached agreement on important
fiscal policy aspects of the Commonwealth Government's
national economic recovery programme.
After two days of discussions in the Premiers' Conference
and the Loan Council, the heads of government agreed that
the Commonwealth Government has designed its macro-economic
policies to promote national economic recovery. In
particular, they agreed that significant fiscal stimulus
to promote recovery, while avoiding excessive strain
on financial markets, would be provided within a budget
deficit of $ 8.5 billion. They agreed that any deficit
significantly above this figure would bring into question
the durability of recovery through its possible effects
in raising interest rates.
The heads of government agreed upon revenue-sharing arrangements
that represent the current . distribution of financial
resources under the control and influence of the Premiers'
Conference and Loan Council. The parties noted the severe
budgetary environment for all governments, both Commonwealth
and State. Within this environment, the substantial increase
in the real value of transfers from the Commonwealth to the
States would require reductions in other Commonwealth
outlays or increases in Commonwealth revenues, or some
combination of the two. The States argued, and the 2/
2.:
Commonwealth accepted, that difficult measures along these lines were
justified by the severity of the States' budgetary problems. The States
agreed that in these circumstances the Connnwealth had gone as far as it
reasonably could in meeting their claims, but stressed that increases in
State taxes and charges could be necessary as their responsibility.
The States accepted that payment of a special revenue assistance grant of
$ 155.5 million in 1983-84, in recognition of the unusual severity of
the States' own budgetary difficulties in 1983-84, would be a once-for-all
transfer. All agreed that this additional $ 155.5 million would be
distributed among the States as in Table I attached and that it would
not be counted in the base for determining tax sharing grants in 1984-85
or beyond.
The heads of government agreed on the revised proposals for Medicare as
outlined by the Minister for Health in Premiers' Conference, including
the basis for compensation payments to each of the States as outlined
by the Minister, on the need for review of compensation arrangements
before the end of 1984-85, and on guarantees on compensation payments
until the end of financial year 1986-87. There will be further
consultations with Queensland on the appropriateness of the
compensation offered to that State.
The heads of government further agreed on Loan Council
borrowing programs for 1983-84 on the basis set out in
the final Commonwealth offer attached.
The heads of government also agreed on a Working Group
of Commonwealth, State and Northern Territory Treasury
officers to examine without commitment longer-term issues
of the distribution of taxation powers between the
Commonwealth and State governments and advise by end
October 1983 on terms of reference for a review by
February 1985 of the distribution of the tax sharing
and identified health grants.
The heads of government welcomed the spirit of co-operation
in which the Premiers' Conference and Loan Council had been held.
LOAN COUNCIL BORROWING PROGRAM FINAL COMMONWEALTH OFFER
On the basis that the States agree to:
limit borrowings in l983-84. by
than the estimates supplied by
Secretariat; electricity authorities to no more
States to the Loan Council
no new projects being admitted to the infrastructure program;
a new money program of $ 7,000 million for the Commonwealth;
a new money program for Commonwealth and Northern Territory larger
non-electricity authorities of $ 341.5 million;
overseas borrowings by the AWB in 1983-84 and subsequent years of
not less than half of its annual net borrowing requirement;
borrowings by the AIDC and the CDB being exempted from Loan
Council approval;
the resolutions circulated by the Commonwealth regarding specific
allocations of loan proceeds in respect of borrowing programs
for 1982-83, and the general principles by which allocations
will be determined in future years;
approve, in principle, the possible issue of indexed bonds by the
Commonwealth;
LOAN COUNCIL BORROWING PROGRAM FINALCOMMONWEALTH OFFER
2
operations of CBAs beingp refrularised in relation totAhe Financial
Agreement as soon as possible in the light, of a report by officers which
would also examine questions relating to CBA borrowings on behalf of
smaller authorities;
States be permitted to nominate funds from their Loan Council programs
for public housing under CSHA terms, subject to them meeting their
matching requirements under the Commonwealth/ State Housing Agreement
from other State funds pending further consideration of this matter.
The Commonwealth is now prepared to offer for 1983-84:
a State Government program of $ 1469 million, an increase of $ 96
million or 7 per cent on the 1982-83 program;
a program for State larger non-electricity authorities borrowing more
than $ 1.8 million a year of $ 1202.6 million, an increase of $ 157.8
million or 15.1 per cent on the 1982-83 program, including the special
temporary and infrastructure additions as previously indicated;
an overseas borrowing ceiling of $ 800 million, with the distribution to
be mutually agreed by the States and States be free to allocate such
borrowings between larger authorities, with no access being permitted to
bond markets overseas pending the consideration of detailed proposals
by the States and the ceiling being subject to a mid-year review in the
light of developments in the external monetary situation and of progress
by State authorities in filling their borrowing program;
the freeing from Loan Council control of terms, conditions and timing
of domestic borrowings of all larger authorities.
The attached tables set out the final Commonwealth offer in detail.
TABLE I TAX SHARING AND SPECIAL TEMPORARY REVENUE ASSISTANCE GRANTS
1982-831983-84
Tax Sharing( b)
$ m Inc
2585.8 1908.7 1700.0 946.0 999.7 397.2 9.5 9.5
11.3 9.5 9.5 9.5 Special Temporary
Revenue Assistance( a)
$ m 47.1 34.8 31.0 17.2 18.2 7.2 Total( b)
$ m Inc
2632.9 1943.5 1731.0 963.2
1017.9 404.4 ( 11.5)
( 11.5)
( 13.3)
( 11.5)
( 11.5)
( 11.5)
TOTAL 7772.5 8537.4 9.8 155.5 8692.9 ( 11.8)
( a) This special temporary revenue assistance in 1983-84 to be a
once only payment and not to be included in the tax sharing base
for future years
Estimate
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1 17-NSW VIC QLD SA WA TAS 2361.8 1743.4 1527.4 864.1 913.1 362.8
TABLE II DISTRIBUTION OF PROGRAMS SUBJECT rO LOAN COUNCIL CONTROL
N0N-ELLCTRICITY
Bas icSpecialInfra'Total TOTAL LOAN COUNCIL
PROGRAMS X change
on 82/ 83
NSW 474.8 427.2 -40.5 467.7 942.5 + 13.0
Vic 369.1 349.0 -6.0 355.0 724.1 + 10.9( f)
QLD 194.8 237.0 17.0 254.0 448.8 + 4.7( g)
SA 191.4 37.5 22.0 59.5 250.9 + 18.5( h)
WA 135.9 43.8 43.8 179.7 -1.2( i)
TAS 103.0 2.6 20.0 22.6 125.6 + 15.9
TOTAL 1469.0 1097.1 42.0 63.5 1202.6 2671.7 10.5
( e)
FOOTNOTES: An increase of 7 per cent.
An increase of 32 per cent.
Committed special addition for salvaging bushf ire affected timber ( SA).
One half of States' bids for new expenditure on previously approved infrastructure projects.
An increase of 15.1 per cent.
Victoria has a slightly lower growth rate than NSW due to completion of Wurdee Boluc and World Trade Centre infrastructure
projects, and the fact that Victoria had a $ 20 million temporary special addition in each of 1981/ 82 and 1982/ 83 as part'of a
$ 110 million package of grants and loans.
Small net growth rate is explained by Queensland's large infrastructure allocation in 1982/ 83 ($ 60m cf $ 17m in 1983/ 84) and the
fact that 1982/ 83 allocations included a temporary special addition for the Burdekin million).
Growth rate affected by the once only temporary special addition of $ 22 million ( see footnote
Ci) Negative growth rate due to completion of Kwinana-Koolyanobbing rail project million in temporary special additions in
1982-83) and the completion of two minor non-electricity infrastructure projects.
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TABLEIli GOMMONWLAIAIIf PAYMU'JTS 1vu sTAll" S ANt) WAMN COUNCil, BORROWING
PROGRAMS SUBJECT TO APPROVAL 1981-82 1982-83 ( est) 1983-84 ( est)
$ m$ m Inc $ m Inc
New South Wales
total Recurrent 3496 3993 ( 14.2) 4485 ( 12.3)
total capital ( net) 799 946 ( 18.4) 1147 ( 21.2)
Total Payments ( net) 4295 4939 ( 15.0) 5632 ( 14.0)
authorities 377 390 468 ( 20.0)
Total 4672 5329 ( 14.1) 6100 '( 14.5)
Victoria total Recurrent 2664 3032 ( 13.8) 3399 ( 12.1)
total Capital ( net) 613 706 ( 15.1) 822 ( 16.4)
Total Payments ( net) 3277 3738 ( 14.1) 4221 ( 12.9)
authorities 293 308 355 ( 15.3)
Total 3570 4046 ( 13.3) 4576 ( 13.1)
Queens land total Recurrent 1914 2120 ( 10.8) 2429 ( 14.6)
total Capital ( net) 381 522 ( 37.0) 583 ( 11.7)
Total Payments ( net) 2296 2642 ( 15.1) 3012 ( 14.0)
authorities 163 247 ( 51.0) 254 ( 2.8)
Total 2459 2889 ( 17.5) 3266 ( 13.0)
South Australia total Recurrent 1160 1334 ( 15.0) 1493 ( 11.9)
total capital ( net) 246 333 ( 35.4) 365 ( 9.6)
Total Payments ( net) 1406 1667 ( 18.6) 1858 ( 11.5)
authorities 26 33 ( 27.5) 60 ( 81.8)
Total 1432 1700 ( 18.7) 1919 ( 12.9)
Western Australia
total Recurrent 1240 1371 ( 10.6) 1536 ( 12.0)
total Capital ( net) 252 299 ( 18.7) 364 ( 21.7)
Trotal Payments ( net) 1492 1670 ( 11.9) 1900 ( 13.8)
-authorities 58 55 44 (-20.0)
Total 1550 1725 ( 11.3) 1943 ( 12.6)
Tasmania total Recurrent 452 510 ( 12.9) 571 ( 12.0)
total Capital ( net) 150 180 ( 20.2) 185 ( 2.8)
Total Payments ( net) 601 689 ( 14.6) 757 ( 9.9)
authorities 2 12 ( 505.0) 23 ( 91.7)
* Total 603 701 ( 16.3) 779 ( 11-i)
Trotal Six States
total Recurrent 10925 12360 ( 13.1) 13914 ( 12.6)
total Capital ( iiet) 2441 2986 ( 22.3) 3467 ( 16.1)
' total Payments ( net) 13367 15346 ( 14.8) 17381 ( 13.3)
authorities 920 1045 ( 13.6) 1203 k 15. 1)
Total 14286 16391 ( 14.7) 18583 ( 13.4)
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* Notes I. 11c ludjea SpecjaL [ T'emporary Revenue A~ s Latance Grants In 198-1-84 of
$ 155.5 million.
2. Includes larger non-electricity authorities only.
3. Assumes State Government Loan Council programs increase by 7.0 per
cent in 1983-84 to $ 1469 million and non-electricity authorities
borrowing programs increase by 15.1 per cent in total
8.4 per cent plus an additional $ 70 million including a temporary
special addition of $ 20 million for Tasmania).
4. Figures for 1982-83 payments are latest estimates. 1983-84
figures are preliminary estimates only.
All figures exclude
payments to the States in respect of Medicare in 1983-84.
fodder subsidies and natural disaster relief in each year.
Special budgetary assistance ($ 19.5 million for Victoria and
$ 10.5 million for South Australia in 1982-83) in respect of
hushfires.
6. All payments under the Community Employment Program ($ 244 million
in 1983-84) are included as payments for recurrent purposes.
7. Totals may not add due to rounding.
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