J U T R L! 4
PRIME MINISTER
FOR MEDIA31 January 1984
The attached telex was today sent to the Queensland
Premier. ACTINGI
The Hon. J. Bjelke-Petersen, MLA,
Premier of Queensland,
Parliament House,
BRISBANE QLD 4000.
My dear Premier,
I refer to your telex of 29 January 1984 to the Prime
Minister concerning the differences between our two
governments on the level of Medicare compensation payments
to Queensland.
I am afraid that, in both your telex of 29 January and that
of 26 January, you have envisaged a role for the Commonwealth
Grants Commission in this matter that was not contemplated by
the Prime Minister, and is simply not appropriate within the
framework of the current arrangements for the payment of tax
sharing grants to the States. These arrangements were, you
will recall, settled at the June 1982 Premiers' Conference and
are to run until 1984-85. I understand that your Government
accepted these arrangements as put forward by the previous
Commonwealth Government.
However, in his correspondence of 18 November and 24 January
the Prime Minister suggested that, if you believe Queensland
is receiving unfair financial treatment, there will be an
opportunity for that contention to be tested in the Grants
Commission's next review of relativities. In other words,
there is already an established mechanism for considering
Queensland's case.
You have suggested that the Grants Commission should be asked
to report separately and immediately on the level of Medicare
compensation being offered to Queensland. But it would
simply not be possible for the Commission to examine equity and
relativity questions effectively if its examination were to
be confined to one particular Commonwealth program. It is
precisely the purpose of the forthcoming review of relativities
to examine the overall financial implications of all
Commonwealth programs for the States.
As the Prime Minister has indicated, the Commonwealth is
prepared to insert an additional clause into the terms of
reference for that review, to ensure that Queensland's
arguments in relation to Medicare are fully examined.
This review is due to be completed before the middle of next
year, and the recommendations would need to be considered at
next year's Premiers' Conference. It is quite misleading of
you to suggest that, because of the previous Government's
delay in implementing the 1982 Grants Commission report, it
would take this Government five or six years to settle the
issue.
The Commonwealth's approach to Medicare compensation has
been to ensure that no State is disadvantaged financially as
a result of the Commonwealth's introduction of the Medicare
scheme. It has never been the Commonwealth's intention that
individual States should " profit" franMedicare yet the
attitude being taken by your Government seems to be to extract
as much as possible from the scheme so that, in your words,
" we can now do something else with the cash".
The situation has now clearly been reached where it is not the
Commonwealth's policy which threatens to disadvantage
Queensland taxpayers, but your own Government's desire to
profit from the introduction of Medicare.
If the Queensland Government signs the Medicare Agreement, it
will be better off than it would have been if the existing
health insurance arrangements had continued, in particular as
a result of the special payment of $ 15 million in 1983-84 and
million in a full year offered as part of the Medicare
compensation arrangements. As a result of the Agreement,
your Government will be more than fully compensated for additional
costs and lost revenue.
It is quite wrong to imply that Queenslanders will be paying
the levy without receiving as much in return. On current
estimates, the Commonwealth would expect to raise $ 212 million
from Queensland taxpayers under the Medicare levy, abolition
of the tax rebate, and other sources in 1984-85. In contrast,
Commonwealth outlays in Queensland under Medicare in 1984-85
are expected to be of the order of $ 220 million.
In the light of the Commonwealth's offer to insert an
additional clause into the Terms of Reference of the Grants
Commission Review, I ask again that you indicate as soon as
possible your willingness to sign the agreement so that the
people of Queensland can participate fully inthe Medicare
program. Yours sincerely
Lionel Bowen