STATEMENT BY THE PRIME MINISTER, MR JOHN GORTON
IN THE HOUSE OF REPRESENTIATIVES ON
SEPTEMBER 1970
Mr. Speaker, I received approximately two hours ago, a copy of Sir H-enry
Bolte's Budget Speech, and I have noted the statement in that speech that it is not the
intention of the Victorian Government to seek an appropriation from the Victorian
Parliament for the purpose of paying payroll tax to the Commonwealth. Sir Henry
Bolte indicated that exclusion of provision for the payment of payroll tax to the
Commonwealth would mean a reduction of about $ 9 million in the payments side of
the Victorian Consolidated Fund for 1970-1971, and I interpolate, it would also
mean a reduction of $ 9 million in the amount of receipts into the Commonwealth
revenue. Payroll tax has been imposed by the Commonwealth continuously since 1941.
The relevant provision of the Commonwealth law concerning the payment of this tax
by the States has since that time, 1941, remained unchanged. The relevant
Commonwealth Act, the Payroll Tax Assessment Act 1941-1969, provides that an
employer" for Payroll Tax purposes includes the Crown in the right of a State.
The payment of financial assistance grants by the Commonwealth to the
States has, since introduction of the payroll tax in 1941, allowed for the payment
of payroll tax by the States and all the States have in fact paid payroll tax since
1941 in accordance with the provisions of the Commonwealth Act. If they had not paid
payroll tax, then their reimbursement grants would have been less.
At the June 1970 Premiers Conference, when Commonwealth/ State financial
relations for the period of five years commencing with 1970-71 were discussed, I
made plain to the Premiers that the Commonwealth proposals were on the basic that
there were no significant changes in the financial relationships between the
Commonwealth and the States during the five-year period. I indicated in particular
that under the proposed arrangement we would expect that the States and their
authorities would continue to pay payroll tax. The actual words used at that
conference were
" If we are to provide such a substantial increase in revenue assistance and
in resources available to the States, it should be on the basis that there
are no significant changes in the financial relationships between the
Commonwealth and the States during the period of the agreement. In
particular, we would expect that the States and their authorities will
continue to pay payroll tax and that the distribution of tax resources
between the Commonwealth and the States will remain unchanged." / 2
2.
Although the Premier of Victoria made claim that he did not regard hL
Government as having agreed to the financial arrangements that resulted from the
Conference, there was no indication by him or any of the other Premiers that they
proposed not to continue to pay payroll tax.
On the other hand, as I have indicated, there was a clear and Unequivocal
intimation from the Commonwealth that the continuance of the payment of payroll
tax was a key part of the offers made by the Commonwealth.
The Commonwealth Budget for 1970/' 71 was accordingly formulated on the
basis that payroll tax would continue to be paid by the States to the Commnonwealth.
This was allowed for in the Budget estimate of payroll tax collections and also in
the provision for the payment of Commonwealth grants to the States.
If Victoria or any other State or States were not to pay payroll tax, there
would Cius be a direct and significant effect on the -Commoniwealth Budget. The
Government is therefore unable to accept the position talken by the Victorian
Government, as stated in Sir Henry Bolte's Budget Speech.
My Government will therefore consider what course of action it should take
in relation to S--r Henry Bolte's statement in order to see that the Commonwealtha
Budget is not impaired.