PRESS OFFICE TRANSCRIPT
PRESS CONFERENCE FOLLOWING PREMERS' CONFERENCE. 29 JUNE 1979
There are three aspects of the Premiers' Conference and
Loan Council meeting to this point that I want to mention.
Perhaps I should recall just for a moment two quite significant
mat: ters that were determined yesterday: the very full
o.~-) praL~ flbeLnveen the GS. a-es and the Commonwealth in
relation to energy matters, the willingness of all the States.,
but particularly NSW and South Australia, to reconsider the
emission standards with the objective of getting a 10% better
usage out of available petrol supplies that we do have in
Australia. That was against the background of a number of
other measures.
I am hopeful -that the States will follow our lead in moving
to gas fired cars, but the general consultative arrangements
we have established on energy are important and very necessary.
The other matter yesterday that we came to an agreement about
concerned industrial relations and a willingness to examine
the very fundamentals of the arrangements between the States
and the Commonwealth. That obviously will involve the
State Ministers, the Attorneys-General, with the objective
of reporting back to a special Premiers' Conference later
in this year. All Premiers entered into that willingly,
recognising the very real and grave importance of those
particular matters.
So far as progress in other areas of the Premiers' Conference
and Loan Council are concerned, I wanted to draw attention
to the very significant movement towards the fulfillment
of the commitment to local government, moving to 1.75% of
income tax for local government, which will give them a
substantial increase this year. On the general financial
arrangements between the Commonwealth and the States, I know
the States are, to some extent, concerned about the provision
of loan funds. But I would point out that if there is to be
any cutback in loan areas or in housing areas, that will be
a very clear decision by the States -themselves because the
financial reimbursement grants resulted in an increase of
$ 644 million, or a little more. That is an increase of
between 13% and 14% much, much more than is need to meet
increased costs as a result of inflation. The States can
switch those funds into any area that they like. The surplus
in that area after it has looked after increased inflation,
inflationary costs, should make up a very large part of any
shortfall in loan funds.
I think it is worth noting that over the last five years the
State Public Services have grown at a much greater rate than
the Commonwealth and the signs of stringency in State
expenditure are not as severe by any means as those in the
Coimmonwealth's. The States, as a result of the decisions that / 2
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have been reached, are left with a wide area of discretion to
look after their own priorities as they see fit -There is
no reason why any particular area should go short I-L will be
a question of the States making judgements about their own
priorities as they believe best and they'll have to carry the
responsibility for the decisions that they make. Now, having
said that, on another matter I'd like to say that I believe
this particular Premiers' Conference is of far-reaching and
great national significance because it was brought -to a
successful conclusion. Agreements on the outstanding matters
relating to the Seas and Submerged Lands Act. We all know
the problems that were caused by this particular dispute by
-the High Court decision, which gave effective power to the
' J~ lfO~ iv~. Lt1 rom tnh.? lnw--4ater imark, au ndl there h-1ve bee.,
long and patient negotiations over the last 2 years, deirc
to resolve in a practical way the problems that arose as a
result of it.
The Commonwealth has approached the issue on the basis, not
of following the Court and saying, we have a power, we're
going to assert it, we're going to use it. We've approached
this whole matter on the basis of saying, well, all right,
the Court has presented us with a practical problem, which
we've got to overcome as practical people. The States don't
lose an interest in what happens, matters of concern to the
State at low-water mark. They're obviously very much
interested and concerned with what happens out to sea and in
the territorial sea and so we've come to arrangements over a
wide range of specific areas, mining and fisheries, pollution
and navigation and shipping control. A number of specific
agreements, many of them based on the concept of joint
authorities between the States and -the Commonwealth, which have
finally put to rest any disputation and argument or disagreement
between any of the States and the Commonwealth.
I think it's a classic example of the way in which patient
negotiation can bring about a successful conclusion. There's
been good-will on both sides and I'd certainly like to pay
a tribute to the manner in which the Commonwealth Officers
and States and the Ministers concerned, the functional
Ministers and the Attorneys-General of the Commonwealth and
the States have negotiated this mat-ter to a final conclusion.
The last outstanding matter was negotiated to a successful
conclusion only last night and this morning, but it was the
one matter outstanding and it does represent a very
significant advance. The whole arrangement is a significant
example of the way in which Governments ought to negotiate,
ought to consult on matters of importance to both. From now
on, on any detailed matters relating to the financial matters,
the Treasurer is here and in relation to the Seas and
Submerged Lands Act, because there are a number of detailed
matters in that area that you might well be interested in,
the Attorney-General is here. So one of the three of us ought
to be able to answer your questicns. / 3
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Ques tion
Mr. Howard, firstly, the Premiers have come out of the Loan
Council meeting saying that is it a farce; that if the
Commonwealth Government keeps giving them this offer virtually
that they can't refuse, you may as well just post it to them
and they won't bother travelling here. What's your response
to that?
Mr. Howard
I think -that's an over-reaction, intemperate over-reaction.
Thc:, : a ct s tha w e'v\/ e h av e ftrour L oan Council Meetings in the
la'i Ye* ar c-Lnd 1on th11in'k you've hneard any Premiers saying;
that after the last Loan Council meeting or the one in Melbourne
in November which approved the infrastructure programmes.
The Premiers naturally want more -than they get at Loan Council
Meetings. We have our problems. We gave a lot of thought to
the offer which we put on the table at this meeting. We don't
believe in Dutch auctions. The proposal that we made to the
Premiers was the proposal that we felt we could afford, that we
thought was consistent with the sort of things that the Federal
Government should be doing, given our present economic circumstances,
and was couched against -the background of the very large increase
in general funds of 13 1/ 2 percent that the States will get unde: r
the tax sharing arrangements in 1979/ 80.
Question If you will pardon my ignornance, could you tell me how many
States have so far legislated to make it possible to make it
possible to go into this next stage of Federalism in which they
can put on taxes ( inaudible).
Prime Minister
I don't think any of them have.
Question
None? Do you think this really indicates that they are not taking
the new Federalism very seriously?
Prime Minister-
The option is there. That's their decision. * we are not urging
it upon them. What we do urge is that States make their own
decisions and don't hide behind decisions of the Commonwealth.
We didn't see any reason why we should put up our taxes to enable
other governments to spend more.
Question Were there any negotiations as to a -tax sharing formula for
next year? / 4
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Prime Minister
We haven't discussed that yet.
Question Would you anticipate that the level would remain as it is,
with the State provision...
Mr. Howard
Ques tion
Senator Durack, do the offshore proposals involve any approach
to the Imperial Parliament? Would they require any action by..
the Imperial Parliament?
Senator Durack
No. It has been a very firm decision that we have made and
have maintained in these discussions, that these imatters must
be resolved within Australia and through the Australian Parlia-E-t
.1 will hopefully now be introducing legislation and my colleagues
in respect of functional-areas will be introducing the iegislatic.)
to give effect to this very great package. It will be a major
lecgislative exercise and we hope to be able to get it introducec.
the Bills introduced in the Budget session. But certainly w~ z-
Wil be moving along as quickly-as possible. What we did discuss
was -the possibility of a once and for all review of some of thiese
old United Kingdom legislation as affects thei States and that's
been decided to refer that matter to the Standing Committees of
Attorneys-General for study with no commitment by the Coimmonwealth-
Government or indeed any of -the Governments to make that approach.
I've got to emphasise that.. But we are putting it to study because
there is, in old United Kingdom legislation, some restrictions
on States.
Question
This would involve Privy Council?
Senator Durack
That was one of the matters, yes.
Question Prime Minister, some of the Premiers have said that they will
either have to increase taxes or raise taxes and charges, or eli-e
take decisions which will result in higher unemployment. Do you
think those are their only alternatives, and whir: h alternative
would you recommend?
Prime Minister
I wouldn't recommend to the Premiers. I've got no doubt that
they are independent people and will make their own independent
decisions. But I would point out, and this was something which
Premiers were not all that willing to acknowledge I would poin~ t
out that the tax reimbursement grant increase of $ 644 million,
of 13% to 14%, is very much more than would be needed to cover
increased costs in that particular area if you are maintaining
the same level of activity in that area. They can spend those
sums, therefore, in whatever way the States want to. If they
want to transfer some Of that recurrent monev~ to capital purposes,
h~ i-ae ftn aione in th-. e past, then th y can1 do SO.
In what they have been saying, I've got no doubt the Premiers
have concentrated on the very real restraint in the capital area;
a res traint that we believe is. right for a number of reasons.
We do need to point out that that increase of $ 644 million is a
very substantial one. It is be-tween 13% and 14%* and it does give
enormous flexibility to the States as to how they order -their
own affairs.
Ques tion
Mr. Fraser, you have already extended once from three years -to
four years the period of the Whitlam guarantee on the revenue
funds. Are you quite firm that you won't be extending it any more.
That four years is the end of that?
Prime Minister
I think since that matter is still to-be debated I should advise
the Premiers of our view before I advise other people. But I
would be very happy to answer any questions about that later in
the day.
Question-( Bowers)
Mr. Howard, a moment ago you used the phrase " we have our problems".
May I assume you are refdrring to the financial problems that
you foresee for -the financial year 1979/ 80. Did you spell out
these problems to the Premiers and would you like to spell them
out to us?
Mr. Howard
I can't give you a preview of the 21st of August but the sort of
things I am referring to is the fact that there are some
re-emerging inflation pressures in the community. We still have
too large a budget deficit. Indeed, we have two big a public
sector borrowing requirement all together. It is not just a
Commonwealth deficit. It is all the money that governments try
and extract from the capital markets that put pressure on interest
rates. We have certain expenditure responsibilities of an everincreasing.
kind, such as social security commitmwnts which aren't
carried by the States. The point that we have made at this
Conference is very simple this: that the Commonwealth Government: has
taken a number of very very difficult decisions against the backcfround
of these circumstances because we believe it was responsible to
do so and we are not prepared to increase Commonwealth taxation to
support the priorities of other governments. I think it is also
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Mr. Howard ( continued)
worth observing as a footnote to Mr. Kruger's question a
moment ago, that Mr. Wran stood on the steps of this building
12 months ago and said the unemployment level in Australia
would go from 6% to 10% as a result of the decisions that were
announced at the last Premiers Conference. Now we all knoq that
hasn't. The point I simply make is that a certain degree of
reactive rhetoric after these conferences is often the case.
Question ( Kruger)
.1 -C t ,7 n t b
n f. L your r; iy s cai. you juarantee t . on't be
increases in taxes in the budget?
Mr. Howard
I am not going to speculate what's in the Budget.
Question ( Lockyer)
Mr. Howard, what was the decision regarding infrastructure
financing. Was there some relaxation for the States of that
three year freeze?
Mr. Howard
Well, I will be putting out a detailed statement on that but it
is no premature disclosure to say that we have approved in
essence the draw-downs put forward by the States under the projec-s
which we approved last October. We have indicated that we will
support, as an infrastructure proposal, the first stage of the
electrification of Brisbane railway line which picks up a co-im.-. tmenz
made in the 1977 policy speech. We have said that we will
give in prificiple, support to a transmission proposal of Alcoa's
in Victoria. In those circumstances because both of those
projects would, as it were, vary the embargo of three years that
was announced in October of last year, that we would consider
any appropriate infrastructure proposals from other States.
I should mention, in that context, that there have been a number
there is likely to be some inevitable slippage on the programme
that was approved last October. There has already been an
agreed deferrment of one of the larger projects for a year or so
and they are all the sort of things that we take into account.
But that particular decision that I have just detailed is one tha_
we took several days ago and it was our intention all along to
indicate that attitude towards the infrastructure proposals.
It wasn't in response to anything that arose during the course oE
the past day and a half. It had always been our intention to do
that just on the basis of fairness.
Question ( Kruger)
Prime Minister, has the Government given any consideration as to
how it will apply the windfall revenue which will come to us
through the OPEC decision.
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Prime Minister
That would be entering into the vein,-of speculation on the
next budget.
Question Mr. Fraser, in one area where the Conironwealthhas not really
restrained its expenditure, rather the reverse, has been in what.
the private sector would claim to be excessively generous
-az rilna :: ion For Commonwealth Public Servants. 13 there any
f. 0o. r1 11 ' isO get, Uut: cer control beforfe it : ceallv does
become a bottomless pit in your budget.
Prime Minister
There is no specific review. I think it is worth noting that
when the scheme was under negotiation a number of measures were
pruned back quite significantly. I am aware of the concern in
some elements of the private sector, of the facts lying behind
your question though.
QuestLion Senator Durack, I rcfer you back to the decisions
In your statement that we've just been handed, the Joint Commonwealth
State Authority being set up -to ' regulate offshore petroleum mining.
Is there implied in that that agreement has been reached on
royalty arrangements for any minerals found outside the three
mile limit?
Senator Durack
No. The royalty arrangements have not yet been resolved. There
is of course existing royalty arrangements as you know, in relation
to petroleum, but there isn't really any immediate urgency about
minerals. 000---