07/12/2011 - 11:13

Federalism looking a bit shaky

07/12/2011 - 11:13

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The latest controversy over native title funding does not augur well for a positive review of federal state financial relations.

The latest controversy over native title funding does not augur well for a positive review of federal state financial relations.

EARLIER this year, Prime Minister Julia Gillard flew into Perth to announce a major review of how GST revenue is distributed to the states.

Her announcement appeared to be a win for the Barnett government, which had been expressing grave concerns about Western Australia’s falling share of GST grants.

At the time, this newspaper welcomed the review, to be conducted by former NSW premier Nick Greiner, former Victorian premier John Brumby and SA business executive Bruce Carter.

We also had reservations about whether the review would bear fruit, because while the prime minister acknowledged WA’s special concerns, she used language that sought to please all states.

For instance, she noted that: “Growth in the mining sector is increasing the discrepancy in the amounts of revenue raised by states and territories, as well as making it more difficult to anticipate GST distribution from one year to the next”.

But she also said the federal government would ensure that smaller states and territories – Tasmania, the Northern Territory and South Australia, which get extra money under the current system – continue to receive a “fair share” of GST revenue.

And the PM added that states with larger economies – such as NSW and Victoria – would not be “unfairly penalised for success”.

In other words, she wanted to keep everyone happy. That just isn’t realistic.

If people should be judged on deeds rather than words, then last week’s deed was not an encouraging sign for WA’s place in the federation.

The federal government reneged on a long-standing agreement to meet 75 per cent of the cost of native title agreements.

Former prime ministers Paul Keating and John Howard had previously both written to the state government, signalling clearly that Canberra would pick up a large share of the tab.

Last week, however, Canberra dropped a bombshell when it said there wasn’t an agreement.

Ironically, the prime minister used her Labor colleague – WA opposition leader Eric Ripper – to try and justify her position.

Mr Ripper had written to the federal attorney-general’s office acknowledging there was no formal agreement between the states and Canberra.

But Mr Ripper, like nearly everyone else involved in this matter, believed there was a long-held understanding from the federal government to meet 75 per cent of the state’s native title compensation costs; his letter had been a bid to formalise this.

“I was arguing for the agreement to be properly formalised so it could be properly implemented,” he told Fairfax Radio last week.

The WA opposition leader said the letter was a “red herring” and the prime minister was “wrong” not to honour the undertakings of her predecessors.

Ms Gillard’s move is worrying on several levels. It highlights – once again – an opportunistic approach to policy making. It shows that pledges to help Aboriginal people mean little when there is a chance to pinch some money off the states to improve her budget. And it shows that WA should have no faith in the review of GST grants.

Premier Colin Barnett tells us that Canberra is becoming less important anyway. 

“As a premier, I spend more of my time with politicians and business leaders in Asia than I do with Canberra,” he told a WA Business News breakfast last Friday.

“That would not be the case with previous premiers, simply due to the scale of the shift.” 

Mr Barnett said that, if the worst-case scenario played out for WA and the state only got 30 cents in the dollar, then federal-state relations would become secondary.

“In years to come we will spend very little time in Canberra because it will be a minor part of the economy and the funding of the services in the state,” he said.

“I don’t think any federal government will want to see that happen,” he added, perhaps more with hope than conviction.

WA’s long-term future may be hitched to Asia, but the state’s finances would be at breaking point if Canberra were to play hardball.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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