Page 1438 - Week 05 - Thursday, 13 May 1993
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On each of the previous occasions when the commission has assessed relativities based on new methodology - such as in 1981, 1985 and 1988 - the Commonwealth has provided special revenue assistance to smooth the process of adjustment for the smaller States adversely affected by the new relativities. This has traditionally taken the form of a guarantee of at least the same money levels of general revenue assistance. The Commonwealth has rejected such a "same money" guarantee for the ACT since self-government.
The ACT will, however, be pursuing with the Commonwealth an undertaking on a process to smooth the transition in order to enable cost-effective change to be achieved. The strategy I will be taking to the Commonwealth calls for the provision of special revenue assistance consistent with the ACT being required to bear no more than a 5 per cent real drop in Commonwealth general revenue funding in any one year. Under this strategy, the ACT would reach the position implied by the Grants Commission relativities by the year 2000 - in a period of about seven years. Within this strategy, the ACT is prepared to accept that the cessation of the asbestos removal program funding in 1993-94 represents a base adjustment to both revenue and expenditure and would therefore be in addition to the 5 per cent ceiling for 1993-94.
Mr Deputy Speaker, Commonwealth support for this strategy will ensure that the ACT's financial future remains viable. An obvious first step in achieving this outcome is to gain the support of the ACT's Federal members. I will be continuing my discussions with all three Federal government members over the next few weeks. Assuming our negotiations with the Commonwealth are successful and the Commonwealth adopts this measured approach, the outlook for the ACT will nevertheless continue to be one of ongoing real reductions in Commonwealth funding over the next several years. The period since self-government has shown that such adjustments are achievable but necessarily involve very difficult decisions.
The Government is committed to continuing that process of adjustment in a way that does not compromise our commitment to social justice and that ensures that all sections of the community are consulted and can have their views on the adjustment process taken into account. The record achieved so far, compared with the States, indicates that long-term structural changes can be achieved by such an approach. It indicates that financial responsibility can be compatible with attainment of social justice objectives in the community. An approach to the extremely difficult budgetary environment we will continue to confront which combines sound financial management with concern for those in the community most in need is the most appropriate one for the ACT.
Mr Deputy Speaker, the potential impact of the commission's report was an important factor in the ACT's budget planning - indeed, much of what is now in the report was anticipated in the published forward estimates. The much larger single-year reduction in 1993-94 implied if the report's findings were immediately implemented is due to a number of methodological changes, some of which can be questioned as being inconsistent with the principle of fiscal equalisation. Certainly they are not consistent with that principle as previously applied by the commission.
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