09/12/2010 - 00:00

Conservatives to pressure COAG

09/12/2010 - 00:00

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Colin Barnett is still annoyed at his most recent COAG meeting experience, and will be hoping for a change in tone when the council next meets.

COLIN Barnett has called for a shake-up in the role of the Council of Australian Governments, saying it has become too intrusive in the decision-making process.

The premier has also said that Western Australian business must become more self reliant, and that the state’s economic future lies increasingly with the growth economies of Asia, rather than the eastern states.

Mr Barnett’s hopes for a change in the role of COAG have been enhanced by the recent election of a coalition government in Victoria, and the likelihood of a similar change when NSW goes to the polls on March 26 2011.

When Kevin Rudd was prime minister, Mr Barnett said COAG was overused and starting to become almost a new tier of government in itself, having established more than 40 committees working on reforms.

“COAG is an important forum,” he said. “I think it should meet twice a year. It should meet in spring and autumn, and it should have a more orderly, predictable agenda.”

Mr Barnett is still annoyed at his experience at the council’s April meeting, at which the Commonwealth’s hospital reforms, including taking one third of the states’ GST revenue, and planned new mining tax, were unveiled, virtually without warning.

“That wasn’t a very cooperative or constructive way to discuss issues across government in Australia,” Mr Barnett said.

The premier expects the health proposals, which provide for the Commonwealth to fund 60 per cent of all public hospital in return for the extra GST revenue, to be revisited at the next COAG meeting, probably after the NSW election.

That will mark a major shift in the power equation, with WA being joined – for the first time since Mr Barnett became premier – by like-minded leaders. The fact that they represent Australia’s two most populous states will mean that reforms have to be argued more persuasively, instead of just expecting the previous Labor allies to fall into line.

Mr Barnett also stepped up his rhetoric on Commonwealth-state financial relations when he addressed an end-of-year Chamber of Commerce and Industry WA lunch. He repeated his warning on the declining share of the state’s GST revenue under the proposed hospitals agreement.

“... if WA was to agree to the Rudd-Gillard health proposals ... and hand over our share of a third of all of the GST, in 2014 we would be getting back 13 cents in the dollar,” he said.

“That’s how serious the issue is. At that stage you’d put a gate on the Eyre Highway and close it off.

“The more we do in government and business … and with the foreign investors to develop this state, the more we are penalised. To a point where the relevance of Commonwealth funding becomes questionable.”

The premier failed to mention the obligations that states have under the Commonwealth Grants Commission, which is designed to ensure that roughly similar levels of service are provided, regardless of where people live.

That’s why WA was a claimant, or mendicant, state, relying on top-ups from the economically stronger members of the federation until the benefits of opening up the Pilbara materialised.

Mr Barnett has said in the past that, now WA is performing well, he accepts the responsibility for helping weaker states. But WA is being expected to kick in too much.

He told the CCI lunch that if current trends continue, the Commonwealth’s share of state spending, which was 50 per cent in 2000, would slump to 36 per cent within the next four years.

“If that trend continues it means … this state has absolutely no option, we have to be more self reliant in all that we do,” Mr Barnett said. “And we have to integrate our economy more closely, ever more closely, with the growth economies of Asia.

“We have no choice ... we are being forced by default into self reliance, and that’s the approach we’ll be taking.”

Slow on stadium

WHILE progress on the imaginatively designed Perth Arena in Wellington Street seems agonisingly slow, the government is expected to give the green light next year to building the long-awaited 60,000 seat sports stadium.

Mr Barnett has tended to lean towards the redevelopment of Subiaco Oval, but he could be having a change of heart.

“It’s still an option,” he said, “but times have moved on. The state’s in a better financial position than we thought we could be just a year ago,” noting now that “Western Australia, Perth, is the booming part of the Australian economy.”

Mr Barnett said the stadium would be back on the agenda in February, and a decision made on its size and location, and the construction timetable. Then, the planning will start in earnest.

And he would like both Canberra and the AFL to kick in to what could be a billion dollar project. But he doesn’t expect the stadium to pay its way.

State roaring ahead

THE national economy may have grown by just 0.2 per cent in the September quarter, but according to the latest WA Treasury report, the state economy is roaring ahead.

The Treasury report for the September quarter has revenue growing by more than 22 per cent. That’s $1 billion more than expected flowing into the state’s coffers in three months. Admittedly, $382 million of that is from higher grants and subsidies from the Commonwealth, mainly linked with the stimulus package. That is expected to start to wind down over the rest of the financial year.

But royalties have generated a similar amount, thanks mainly to higher prices and volumes for iron ore, nickel and gold. And that takes into account the impact of the strong $A.

Tax revenue is up $226 million on the same time last year, reflecting the increased activity. Land tax is $125 million above the level 12 months ago, thanks partly to the late issue of assessments. Payroll tax is more than $60 million ahead of the corresponding period, due to increased employment and wage growth, and there’s an extra $37 million for higher interest income.

There’s also some good news on expenses. They are increasing at 5.4 per cent, which is more than the 3.9 per cent target in the last budget. But it is a significant improvement on the budget performance of recent years.

Salaries were the main contributor, rising 5.8 per cent, due to increased staff numbers and pay rates.

Surprisingly the budget was in deficit to the tune of $47 million for the quarter. But that compares with a deficit of $778 million for the same quarter last year, when the full year result was a surplus of $831 million.

On that basis, only a sharp downturn would prevent $1 billion dollar plus surplus being achieved for the full year.

That’s good news for any government in the middle of a four-year term.

• Peter Kennedy is ABC TV’s state political reporter.

 

 

 

 

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