Page 31 - Week 02 - Tuesday, 23 May 1989
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PREMIERS CONFERENCE AND LOAN COUNCIL
Ministerial Statement and Papers
MS FOLLETT (Chief Minister), by leave (3.07): I have already provided members of the Assembly with papers which outline the issues raised at last week's Premiers Conference and Loan Council meeting. These include a copy of the Commonwealth's offer and a copy of the Commonwealth Treasurer's statement on the outcome of the conference.
As you will be aware, the Commonwealth's initial offer did not meet its commitment to maintain funding to the ACT in real terms until 1990-91. Following negotiations with the Prime Minister, however, the Commonwealth did modify its position.
The ACT was the only State or Territory to gain a concession from the Commonwealth's offer in terms of financial assistance grants. The concession enables the ACT to utilise, in 1989-90, the funds the Commonwealth had proposed to place in a trust account until after 1990-91. While not ideal, this concession satisfied the Commonwealth's commitment of real terms funding to the ACT Government. The ACT is to be treated on the same basis as the States in relation to other financial arrangements such as the Loan Council borrowing program. In general, the outcome of the Premiers Conference and Loan Council meeting must be regarded as satisfactory given the severity of the cutbacks imposed on, and accepted by, the States.
In relation to overall Commonwealth-State financial arrangements, the Premiers Conference and Loan Council meeting agreed to a net reduction in general revenue grants to the States and Northern Territory of $550m against the forward estimates, representing a 2.8 per cent reduction in real terms.
The meeting also agreed to a net reduction in general purpose capital assistance of 5.2 per cent in real terms, a net reduction in specific purpose payments to the States of 0.5 per cent in real terms, a reduction in global borrowing limits of 25 per cent in real terms, and conversion of funds previously nominated for housing under the Loan Council program to grants under the Commonwealth-State Housing Agreement.
The main issues for the ACT were the proposal to establish a trust account for guaranteed funds, changes to housing funding arrangements and the reduction in global borrowing limits. The Commonwealth's original offer provided for the additional funding payable to the ACT under the real terms guarantee, to be paid into a Commonwealth trust account. The principal and accrued interest would then be used to assist the ACT in adjusting to full State-type funding in the two years following 1990-91. If this initial offer had not been modified, the Commonwealth's commitment to maintain real funding levels would have been broken.
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