Page 1434 - Week 05 - Wednesday, 11 May 1994
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .
Madam Speaker, the Financial Agreement Bill 1994 provides for formal membership of the Loan Council for the Australian Capital Territory. As members are aware, this is the first time that has occurred. The new agreement also reflects changes to the role of the Loan Council that have occurred over recent years. As evidenced by recent Premiers conferences, the Loan Council now assesses the total financing requirements of all governments - the Commonwealth, the States and the Territories, including local government - and this assessment includes all forms of financing, such as financing leases, and not just the conventional borrowings, as was the case previously. The Loan Council also now has the responsibility of assessing the viability and the sustainability of each government's overall financial position. I must say, Madam Speaker, that the ACT has fared very well under this kind of scrutiny.
The new arrangements were made public in a document that was agreed by the Loan Council at its meeting on 5 July 1993. That document is called "Future Arrangements for Loan Council Monitoring and Reporting". The new agreement has been proposed in the context of reforms which were agreed by all governments, and there are other reforms apart from the membership of the ACT and the Northern Territory. The agreement, as it appears before us, abolishes the restriction on States borrowing in their own names. This recognises that States have in the past adopted a practice of borrowing through State financing authorities. The agreement also removes the Commonwealth's explicit power to borrow on behalf of the States, and this recognises that in fact the Commonwealth has made no new borrowings on behalf of the States since 1987-88. The agreement also removes references to the National Debt Sinking Fund, as this is now redundant. Madam Speaker, the new agreement comes into operation when the parliaments of the Commonwealth, the States, the Northern Territory and the Australian Capital Territory enact identical legislation through our respective parliaments. I understand that all jurisdictions have commenced this task.
I would like to comment in greater detail on some of the points raised by members. Mr Kaine made reference to clause 4 of the agreement. This clause, Madam Speaker, relates primarily to procedural matters such as convening and chairing meetings, quorums for meetings and so on. But subclause 4(9) has very complex drafting, as we found. In fact, it stumped me yesterday. This subclause reflects an agreement reached between the Commonwealth, with the support of the other States and Territories, and the then new Western Australian Government. It reflects the fact that the Loan Council has traditionally operated on the basis of consensus. Agreement between governments and improved disclosure requirements and scrutiny by financial markets make it appropriate that this consensus approach be continued.
Western Australia, in the course of debate on this matter, considered that subclause 3(15) of the existing agreement, which refers to Loan Council resolutions as being legally binding, could imply reliance on legal constraints rather than on consensus. So the wording of subclause 4(9) was settled following very lengthy discussions between the Solicitors-General of Western Australia and the Commonwealth. What it is intended to do is to confirm that Loan Council resolutions are not legally binding.
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .