Page 520 - Week 02 - Thursday, 14 May 1992
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business competitiveness at a time when the economy can least afford such losses. This option would also adversely impact on low inflation outcomes.
The States believe that this budget crisis must be addressed immediately according to the following principles:
a) re-establishment over time of a revenue base commensurate with expenditure responsibilities;
ii) certainty, predictability and real growth of Commonwealth funding;
iii) greater flexibility for the States in the use of
Commonwealth grants: ,
iv) rationalisation of functions between the Commonwealth and the States should be budget neutral and be based uponthe principles enunciated at the Conference of Premiers in November 1991; and appropriate ongoing consultation on Commonwealth/State financial arrangements..view of the Commonwealths rejection .of the national income sharing proposal, the States put forward the following proposal
The Way Forward
The level of Commonwealth payments to the States could be increased on the following basis:
total grants, excluding grants for on-passing; to be a fixed share of total Commonwealth taxation revenue broadly in line with that applying in the early 198Vs and sufficient to re-establish, over time, a revenue base for the States commensurate with their expenditure ponsibilities guarantee of total payments, excluding grants for onpassing, in any year to not fall below the 1991-92 level indexed in real per capita terms; and the above arrangements to be adjusted, where appropriate, to reflect changes in functional responsibilities.
This option proposed by Mr Dawkins two weeks ago involves a sharing of fiscal responsibility between the Commonwealth and the States while ensuring that States are able to maintain service provision.
Specific aggregates as a proportion of Commonwealth payments to the States should be reduced to no greater than 30 percent. This is comparable too the level at the beginning of the 1980fa. States believe that this target could be achieved within 5 years.
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