02/06/2011 - 00:00

Barnett on front foot in fed stoush

02/06/2011 - 00:00


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Colin Barnett’s not going to take a backward step in his funding fight with the federal government, and Wayne Swan in particular.

THE conventional wisdom in state politics is that a stoush with the federal government, especially over money, is good for the premier of the day. Local voters will get behind their state leader.

It worked for Sir Charles Court after the election of his Liberal-Country Party government in 1974, while Gough Whitlam’s Labor administration was going through all sorts of contortions to stay in power and deliver its policies in Canberra.

Sir Charles laid off for a time after Malcolm Fraser’s sweeping victory following ‘the dismissal’ in late 1975. But then what was perceived to be Canberra’s inaction became too much for the impatient premier, and the new government quickly became the target.

‘If only Canberra would get off our backs and we could get on with the job,’ was the frequent plea coming from the premier’s St Georges Terrace office.

So Colin Barnett was treading a well-worn path at last week’s The Australian-Deutsche Bank business leaders forum when he directed both barrels at Julia Gillard’s government in general, and her treasurer, Wayne Swan, in particular.

“We’ve been through a very low point and we are at a low point now,” he told the 350 business representatives at the forum.

“The Commonwealth has lost the plot. It’s degenerated in the last 15 months into an unsavoury and unfriendly environment.”

But there is a significant difference between the row this time and those involving premiers such as Sir Charles and his successors. Whereas they would go to Canberra with the begging bowl, pleading for some financial handouts, the power equation is changing.

For example, Mr Barnett estimates that the value of exports from Western Australia now represents 44 per cent of the national total. That’s a sharp jump from the days of Richard Court’s government just 10 years ago when then prime minister John Howard would say with some amusement at WA Liberal gatherings: ‘I know Richard Court will tell me that WA now provides 25 per cent of the nation’s exports.’

The significance of even that figure seemed to escape the wily PM, but there’s no escaping what has happened since. Mr Barnett expects the figure to keep rising – to around 50 per cent by the end of the decade. In other words, the national economy will be dependent on WA’s export performance to ensure our balance of payments is kept in check.

But the premier, who was in a relaxed and expansive mood, indicated there was more, pointing to a sharp decline in total Commonwealth funding in WA. He said a few years ago the Commonwealth contributed 45 per cent of total state spending. That had dropped to 38 per cent, and would hit 30 per cent within a few years.

Noting what he described as a major shift in the political balance, he added: “There is an unravelling in Commonwealth-state financial relations, and relations which have underpinned the federation.”

Mr Barnett said it was distressing that relations had deteriorated so markedly in the past 15 months, after a promising start by Kevin Rudd when Labor won power in Canberra in 2007. He singled out the Infrastructure Australia process, in which millions were allocated for key WA projects such as the Ord River stage two, development of the planned Oakajee port north of Geraldton, and the Northbridge Link, as a ‘good reform’, even though it was an attempt to pick winners.

That was in Mr Barnett’s “my friend Kevin” days.

But the introduction of Mr Rudd’s health reforms, which involved giving up one third of the state’s GST and control of the state’s hospitals, led to the goodwill starting to evaporate. WA’s opposition to the plan effectively threw a spanner into the works and it had to be significantly overhauled. Mr Barnett is now of the view that health reform is getting back on track.

The planned mining super profits tax was probably the low point, with the premier branding it a Commonwealth takeover of mining in Australia. And as WA contributes at least 60 per by value of the nation’s minerals output that was something he was not even going to entertain.

Mr Barnett stressed a number of points he believes Canberra bureaucrats and federal MPs don’t seem able to grasp. The first was that the minerals belong to the state. The second was that a royalty was not a tax. He described it as “the price at which a mineral is sold to the company”. The third was that the Commonwealth, by guaranteeing to reimburse mining companies the cost of royalties they paid to the states, was effectively providing the resource free of charge.

He says that’s unacceptable, adding: “I hope federal Treasury isn’t telling its graduate economists that the price of a finite resource should be zero, because that’s the implication of their policy.”

And he doesn’t believe the states will be fairly reimbursed under the new tax, describing it as a “dog’s breakfast” and predicting the revenue will disappear in the bowels of the federal Treasury.

Mr Barnett was disparaging towards the federal treasurer, but it was the comments on this issue of the other panellists that were particularly significant.

Don Voelte, on his last day as chief executive of Woodside Petroleum, said there were some federal ministers who were good to do business with. But when asked about Wayne Swan, all he would say was: “Mum taught me one thing. Never speak badly about anybody.”

Shell Australia chairwoman Anne Pickard was more forthcoming. She singled out three senior federal MPs for praise. The first was Resources and Energy Minister Martin Ferguson, his opposite number Ian MacFarlane, and also Special Minister of State Gary Gray – a former Woodside executive.

“They get it,” she said.

But there was a clear inference that the two executives believed that a big number of federal MPs did not fully appreciate their industry’s significance, and the impact of government decisions they believed weren’t in its best interests.

Mr Barnett also referred to an issue that is expected to have reverberations for Labor later this year. He was pleased there had been action on the local content front, and that more orders had started to flow for the metal fabrication workshops in Kwinana.

But that’s not good enough for the opposition and the unions. They want legislation to commit the resource companies to ensure local companies are guaranteed a minimum proportion of the work. And the unions are critical that Mr Ferguson has not played a stronger role at the federal level to ensure that local jobs are guaranteed.

Such a move would be contrary to the reforms of the Hawke-Keating years. But the early mail is that the federal government in general, and Mr Ferguson in particular, will be on the receiving end of some highly critical union motions at Labor’s national conference later this year.

Factional leaders will be pressured to stifle open dissension. But party dissidents are saying it’s time to put the government on the spot.



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