Colin Barnett is riding high and consistently outpacing Canberra. But he faces some major challenges to maintain his trajectory.
THE alignment two weeks ago of four planets in the solar system may well have been seen by the superstitious as a portent of disaster.
But for Western Australian Premier Colin Barnett it’s hard to find any evidence the stars have done anything but line up positively for him since his surprise election in September 2008.
Mr Barnett’s influence as the key player in the economically most important state in the nation belies the thin majority he achieved less than three years ago when he won over Brendon Grylls and his Nationals to form government.
In that period WA has sailed through the global financial crisis to end up in better shape than any other state. It has seen the revival of significant resources projects that will underwrite the national economy for years and, importantly, Mr Barnett’s federal Labor rivals have stumbled from one disaster to the next.
The wealth of WA, and the federal government’s undisguised desire to grab it, has allowed the premier to play the states’ rights cards so convincingly.
He has thumbed his nose at Canberra’s efforts to take over health and been a major force in challenging federal Labor’s moves to tax mining profits. At the same time he has highlighted the falling levels of GST funding flowing back to WA. It is a unique skill to be rich and cry poor at the same time, and get away with it.
Last week he took the states’ rights fight to a new level when his government confirmed a long expected plan to increase some iron ore royalties, a tweak that will raise about $2 billion over the next four years.
Federal Treasurer Wayne Swan suggested the WA government had kicked an own goal because the Commonwealth Grants Commission would simply take account of the increased royalties when it decided on dispersing the GST funds, reducing the state’s share.
But Mr Swan was smarting from the direct impact of WA’s royalty increase on his plans to generate a surplus within this term of government.
By highlighting the grants commission, Mr Swan simply underlined how little control he had over the situation.
Canberra also said the royalties move threatened federal infrastructure funding for the state’s key projects.
Mr Barnett must be laughing as his federal rivals froth at the mouth. The more they posture, vent and threaten, the more his move to secure the state’s own source of funds without reliance on vested interests in Canberra looks like a politically sound strategy.
Importantly, last week’s state budget was not just about proving WA’s financial independence, it was also a chance to show off his new state treasurer, Christian Porter. This was a key step for the conservative government because it shows there is now a potential successor for Mr Barnett after the implosion of Troy Buswell last year.
It is early days for Mr Porter but just having the potential for a steady hand at the Treasury tiller will give the premier the breathing space he needs to focus on state development and prepare for the next election.
Notably, the state Labor opposition has been in no position to exploit this moment. Opposition leader Eric Ripper is struggling to get traction in the polls and he has succession difficulties of his own.
Having been challenged for the Labor leadership last year by his treasury spokesman Ben Wyatt, Mr Ripper has lost a top performer in that portfolio just when the government was at its weakest.
Complacency
Despite everything going so swimmingly for Mr Barnett, politics is a fickle business and there is always something around the corner that can change everything.
Mr Buswell’s period of disgrace and subsequent return as transport minister was something of a blight on the track record of the conservatives last year, though the news of that drama was soon swamped by the debate around the mining tax and subsequent political demise of (then) prime minister Kevin Rudd.
The jocular member from Busselton was a hard hitter within cabinet who was prepared to tackle tough subjects. He is now back and, with leadership unlikely, he has little need to hide his real self. This could make life interesting for the government.
Mr Barnett has also taken the opportunity to change the leadership of his Department of State Development.
His premiership has several major projects riding on it and he clearly felt that the department overseeing those projects needed new hands at the wheel. This is an area, too, where the states’ rights campaign may backfire because some of these key projects have federal money promised to leverage WA’s commitment.
In other areas of note, Mr Barnett has also split Treasury and Finance, possibly sensing that government trading enterprises, which act autonomously in many respects, needed closer watching.
And, despite the public affirmation of states’ rights, there are always issues, which are hard to keep suppressed. Having rejected the Commonwealth takeover of hospital funding the state government needs to keep a lid on the problems that arise from that sector.
Finally, Mr Barnett’s government relies on the goodwill of the Nationals and its leader, Mr Grylls, who has about $1 billion to spend as a result of his Royalties for Regions policy.
This is an area of immense danger for the Liberals. Not only is there a risk of waste or obvious pork barrelling, there is also the political implications of the two parties fighting it out for seats where both conservative parties believe they have a stake.
Mr Grylls has brought the Nationals in WA back from the dead and he is unlikely to give up ground to the Liberals – with whom he took some time to agree to form government two and a half years ago. A nasty fight could put that allegiance in doubt.
Another area Mr Barnett needs to watch is law and order. The streets of Northbridge reflect the ugly side of the state’s rising wealth and the immaturity of some of its recipients.
Interestingly, it is Police Commissioner Karl O’Callaghan who represents the major voice in this space, and not always in tune with the government.
Mr O’Callaghan is almost the only departmental head equivalent who is seen as a regular and outspoken commentator in the media. His views are influential because they reflect on the government’s track record in this important portfolio and they sometimes clash with other political agendas, such as the development of a diversified hospitality sector.
The commissioner, for instance, is a regular opponent of new liquor licences, even those for small bars, a policy of the former Labor government, which has been continued by the conservatives.
Project focus
It would be easy for a business newspaper like WA Business News to perceive that big business was simply where it is at but our research on the state’s most influential does look more widely than business and its political masters.
In our view the most influential are those who guide major commercial decisions, policy and public opinion.
But, in this period of economic volatility and the unusual conditions created by the rise of China, it is hard to escape from the influence of the people behind the massive projects driving not just this state, but also the nation.
That is why our roll call of the top figures of influence in this state involves five people – Rio Tinto iron ore chief Sam Walsh, Fortescue Metals Group founder Andrew Forrest, Woodside Petroleum chairman Michael Chaney, Hancock Prospecting owner Gina Rinehart and Oakajee Port & Rail chief executive officer John Langoulant – intimately involved in the leadership of major projects in this state.
Just on the scale of what they are driving, it is hard to find a similar match elsewhere in the private sector, the public service or opinion leadership. There are no billion-dollar commuter rail projects, no sweeping cultural changes or unique retail trends that are being driven out of WA that compare to the way these projects are altering the state’s landscape – making us richer and the envy of the rest of the nation. That may, of course, be temporary.
And it is not the projects alone that get these people over the line. Mr Walsh sits on the board of global giant Rio Tinto as well as a number of community organisations based in Perth. He has clearly made his home here and become unusually outspoken on cultural matters in a way that his local counterpart in BHP Billiton, Ian Ashby, has not.
Mr Forrest has changed the Pilbara iron ore sector forever, has challenged the federal government on tax and raised awareness on indigenous employment. He’s not perfect but
it is hard to ignore the nation’s
richest man.
With Don Voelte stepping down from the CEO role at Woodside, there is a void of influence from the state’s biggest company and dominant LNG player. His replacement, Peter Coleman, has not even started yet. That leaves the company’s chairman, Mr Chaney, as the obvious representative. The former Wesfarmers CEO and current chairman of National Australia Bank was already in the top 10 for these achievements.
When rivals hint at a certain female entrepreneur’s commercial failings, it is clear Ms Rinehart has got under the skin of the major players in iron ore, just as Mr Forrest did five years ago.
She’s Australia’s richest woman and had her political ambitions awakened by the mining tax last year. Is it a surprise that conservative commentator Andrew Bolt has appeared with a regular television show after Ms Rinehart took a board seat on the Ten Network?
Mr Langoulant makes an appearance in the top 10 not only because of the importance of his role to the state government. The fact is, governments appear to need his skills, which transcend the commercial sector. His chairmanship of GESB is a good example.
Outside the resources players lie two others. Wesfarmers CEO Richard Goyder’s influence in WA remains high, but it is obvious the Coles supermarket chain, which makes his company the biggest private sector employer in the nation, is taking his focus away from the state.
And Kerry Stokes completes this set. The merger of WA Newspapers Holdings and Channel Seven makes him a powerful media baron in this state, although it can’t be forgotten his other interests include direct resources investment and control of the local Caterpillar earthmoving franchise.
