Commonwealth-state funding arrangements could become an even bigger issue if the coalition wins government next year.
Commonwealth-state funding arrangements could become an even bigger issue if the coalition wins government next year.
TWO senior Western Australian Liberals have combined in a fresh approach to achieve what they believe is more equitable financial sharing arrangement between the Commonwealth and the states.
Richard Court, who was premier between 1993 and 2001, delivered a blunt warning on the consequences if the current resistance to change by both sides of politics continued.
“The federation will fracture unless there is a change of heart by the major political parties,” Mr Court said.
The former state treasurer, Christian Porter, accused the federal government of hiding behind the goods and services tax to shirk its responsibilities to assist the poorer states.
“ … why does it fall on already underfunded states to provide so much of the funds now used for the equalisation of capacity in financially weaker states?” he asked.
The senior Liberals were key speakers at a meeting of the Samuel Griffiths Society in Brisbane last weekend; the society is named after the first chief justice of the High Court, and is aimed at ensuring that any proposal to change the Australian constitution is first subjected to exhaustive community debate.
Mr Court said there was no need for new taxes or to increase the tax take across the country; the issue was the effectiveness with which the revenue from existing taxes was distributed and spent.
The former premier said the most critical issue for the states was to regain some financial autonomy. He pointed to a “tidal wave of a massive growth revenue stream, courtesy of the current development of the next generation of offshore LNG projects” on the North West Shelf, as the vehicle for change.
Mr Court said the initial North West Shelf LNG project, even though it was in Commonwealth waters, had a royalty sharing arrangement in which 70 per cent of the revenue came to WA, and 30 per cent to Canberra. The deal had been negotiated more than 30 years ago between then premier Sir Charles Court, and prime minister Malcolm Fraser.
“But the bottom line is all the states benefit from this arrangement and that is why all the states should be very, very, very interested in the types of negotiations Western Australia is trying to do with our central government,” Mr Court said.
Under the next generation of offshore LNG projects there will be no royalty revenue for the states. All the benefits will go to Canberra.
Mr Court said new revenue streams from the developments should be shared 50-50 with the states on a per-capita basis, independent of the Commonwealth Grants Commission, and with no strings attached.
“Simple, fair, I don’t care which (federal) government does it, just do it,” he said.
Mr Porter directed his attack on the fact that the goods and services tax, which was meant to be state money, was being redistributed to the weaker states to achieve equalisation of services across the nation. Previously this had been the responsibility of the Commonwealth.
“Buttressing the contention that the GST should be considered in practice as state revenue is the fact that, to achieve receipt of GST monies, the states agreed to give up a range of revenue sources to which they previously had access,” Mr Porter said.
His point was that the financially stronger states had been dudded. They had abolished so-called ‘nuisance taxes’, over which they had control, in the deal to pave the way for the GST. But, in WA’s case especially, the guaranteed revenue stream of the now-abandoned taxes had been replaced by the shrinking GST reimbursements, thanks to the grants commission.
He said the present arrangement was unreasonable for the four larger states, which were being asked to shoulder a major portion of the burden to assist the Northern Territory, for example, which relied on the Commonwealth for 80 per cent of its spending. For most of the states, the Commonwealth contribution was about 50 per cent.
Mr Porter noted that WA had been a net contributor to Commonwealth finances since the mid 1980s.
“Western Australia’s growing economic strength, the Commonwealth’s proposed mining tax, and the state’s falling share of GST revenues, are likely to see its net contribution to the federation continue to grow substantially,” he said.
Mr Porter added that, if the four larger states had more financial independence, they would be better placed to “invest in infrastructure designed to grow their economies and grow wealth and revenue for the entire nation”.
The call from Mr Porter and Mr Court to stop sidelining the states has special significance given that the coalition is firm favourite to win next year’s federal election.
But Mr Court said both sides of politics must listen, adding “ … we need to see an indication from at least one of them, but hopefully both, that they are prepared to reverse that trend”.
• WA Business News will present a breakfast event with Christian Porter, ‘Our Man in Canberra?’ on Tuesday August 28. Details 9288 2100 or events@wabusinessnews.com.au
Personal touch
IT didn’t take long for Labor MPs to react to the sledging from Premier Colin Barnett at the Liberal Party’s recent state conference.
The first to respond was Labor’s spokesman on legal issues, John Quigley. He had been singled out by Mr Barnett as the likely attorney-general in a Labor government, despite being investigated by the Corruption and Crime Commission.
The premier was clearly questioning Mr Quigley’s fitness to be the state’s number one law officer, even though there were no adverse CCC findings.
Well, Mr Quigley was not to be denied with the swift rejoinder that if he was unfit for higher office, why did the premier suggest earlier in the year that he jump ship and join the Liberal Party? The bait? A possible cabinet post.
The event occurred about the time of Christian Porter’s surprise decision to nominate for federal politics, vacating both the attorney-general and Treasury portfolios.
The premier’s defence was that his proposal was a throwaway line. But often surprise defections from one party to another, or to take a prize position offered by the other side, can start in jest.
There was no mirth when Collie-Preston MP Mick Murray – the subject of a Barnett barb that he was an “abalone poacher” – let fly across the parliamentary chamber. I suggested last week that Treasurer Troy Buswell was vulnerable should the opposition decide to retaliate, and Mr Murray proved me right.
Mr Murray, who established a reputation as a no-nonsense player in the South West Football League, accused Mr Buswell of being a “bra snapper”, based on his past exploits, and a “boofhead”.
Not very edifying stuff, it must be admitted, but when you throw something in politics – especially when it involves personal criticism – you often have no idea where it is going to end up. And so it proved to be.
