03/03/2011 - 00:00

GST argument likely to continue

03/03/2011 - 00:00

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Despite the Commonwealth’s recent GST concessions to WA, the federal government won’t be expecting much thanks.

GST argument likely to continue

IT was Paul Keating who famously warned while federal treasurer: “Never get caught between a state premier and a bucket of money”.

The message was clearly that there was a serious danger to your wellbeing; you would get trampled in the rush.

The recent announcement that Western Australia will get an extra $400 million from good and services tax revenue for 2011-12, and the subsequent reaction, was a perfect illustration of Mr Keating’s warning.

Remember that the premier, Colin Barnett, has been warning for months that the state’s share of the GST revenue would continue to decline because of the ‘shadowy’ Commonwealth Grants Commission formula, which effectively penalised states with strong economies? And WA is such a state.

Treasurer Wayne Swan reportedly intervened on WA’s behalf, saying the state should not be penalised for removing royalty concessions for some iron ore miners. The state stood to lose up to $700 million in GST revenue if the commission classified the royalty revenue into a higher rate.

This means that WA’s share of the GST revenue will rise by 0.4 per cent to 7.5 per cent. That’s the equivalent of a return of 72 cents for every dollar paid in GST.

But this turnaround in GST fortunes barely cut the mustard with WA Treasurer Christian Porter. While acknowledging it was better than expected, he added: “ ... what was expected was pretty ordinary”.

The reactions of the other states was fascinating, especially when considered in the context of predictions that Mr Barnett will do better at the Commission of Australian Governments meetings when there are more Liberal premiers around what was previously an almost exclusive Labor club.

In fact the loudest grizzles came from his party ally, new Victorian Premier Ted Baillieu. He did have a point. His state’s share will be cut by almost one percentage point to 22.5 per cent. That’s $280 million.

He described it as an “unprecedented cut” in Victoria’s GST revenue, and demanded that the allocations be reviewed; so much for party loyalty with his WA Liberal ‘cousins’.

Perhaps the most pointed line in the whole debate came from Queensland Treasurer Andrew Fraser. As treasurer of a resources state, he has little sympathy for Mr Bailieu’s position, and more in common with the WA view.

Mr Fraser noted that Victoria generated only $44 million in mining revenue last year, yet was set to receive almost $2 billion in mining revenue generated by the resource states – effectively Queensland and WA.

“The upshot of the current process is that the person with the most interest in the resource sector of WA and Queensland is the Victorian treasurer,” he said.

As noted previously in this column, Mr Barnett has acknowledged that the CGC has a mandate to compensate the financially weaker states. The rationale is that all Australians should have access to roughly equal services regardless of where they live.

WA was a beneficiary for many years. The former premier, Sir Charles Court, described how WA leaders would go to Canberra each year with a ‘begging bowl’, grateful for any extra money that might be thrown the state’s way.

And a former NSW transport minister Peter Cox told me 30 years ago that country roads in WA were much superior to those in his own state, thanks to the reallocation of taxation revenue raised in NSW.

But the boot is now on the other foot, with WA being a net contributor to other states. Mr Barnett acknowledges the principle, saying that’s how the federation works. But he’s persistently said a floor should be put in the contribution any one state is expected to make. He’s opting for 75 per cent of a state’s GST revenue. That’s still three cents in every dollar more than the latest concession thrown WA’s way.

Mr Barnett’s anxiety may have been relieved somewhat by the preparedness of the Commonwealth to drop the insistence that one third of each state’s GST revenue go into the hospital reform program. But the intense lobbying for an improved deal for the resource rich states will continue.

Even if that deal is forthcoming, the Commonwealth should expect little thanks. Mr Keating’s observation is as valid today as it was 25 years ago.

No more Mr Nice Guy

STATE Labor MPs must be wondering what has happened to their normally affable leader, Eric Ripper. Government MPs expect to be in the firing line from time to time, but not so from his own side.

The latest to feel the lash of his tongue is former senior minister Alannah MacTiernan, no shrinking violet herself. Mr Ripper remarked on her recent high media profile, including her defence of Transport Minister Troy Buswell over his questionable driving record, as a symptom of “relevance deprivation syndrome”.

Ms MacTiernan wasn’t to be denied, accusing Mr Ripper of “slashing and burning” a lot of people.

So what has changed for the Labor leader, a political veteran of 23 years, who’s established a reputation as a good parliamentary debater, without the nasty personal streak that can sometimes creep in?

The new hard edge started to surface after last year’s federal election, which was a disaster for Labor in WA. Mr Ripper had held his tongue over Labor policies such as the doomed resources super profits tax and the revised resource rent tax, which ensured the party’s vote went south locally.

But he found his voice after the poll, blasting the party’s federal campaign for its failure to acknowledge issues important to Western Australian voters. He’s also given his Canberra colleagues a blast over its now abandoned plan to take one third of WA’s GST revenue to fund hospital reforms.

Then he found his feet earlier this year in response to the abortive leadership challenge by Ben Wyatt and his backers.

He told the miscreants they had failed to read the party’s rules, and when the challenge collapsed in a heap relieved Mr Wyatt of the prized Treasury portfolio, and Wyatt backer Paul Papalia of responsibility for corrective services. And Labor’s longest serving MP, Tom Stephens, received a verbal biff for his role in the leadership challenge.

Some of the leader’s colleagues say it was about time he asserted his authority over the party. He had to quell the backbench sniping, and get MPs to concentrate on the main game – exploiting questionable government decisions, especially on behalf of voters doing it tough.

But his critics will continue to look for a lift in Labor’s support, and Mr Ripper’s own approval rating, in the polls. That’s what the new macho approach is designed to achieve.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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