26/04/2012 - 11:11

McGowan buys into GST fight

26/04/2012 - 11:11

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The parties are playing it safe in order to seek a better deal in the GST carve up. Let the games begin.

McGowan buys into GST fight

The parties are playing it safe in order to seek a better deal in the GST carve up. Let the games begin.

Treasurer Christian Porter dismissed the strategy as a stunt. And it probably was. Nevertheless, opposition leader Mark McGowan’s visit to Canberra last week to seek a better GST deal for Western Australia won’t do him any harm.

It’s not every day that an opposition agrees to publicly support a government. Some say that’s not in its mandate. Others say such a move is an example of an opposition bereft of ideas.

And on the rare occasion an opposition does offer its backing – in this case against the common enemy, ‘Canberra’ – how should the government react?

Acceptance could be seen as weakness on a government’s part. That it lacks the clout to get its message accepted without a ‘helping hand’ – in this case from its opponents.

It just might have been conceivable for Mr Porter to welcome Mr McGowan on board on the basis that he’s frustrated in trying to get his case across to Labor’s ‘allies’ in Canberra, and perhaps a helping hand might tip the balance, but that risks the prospect of a breakthrough occurring, which means WA Labor getting the credit, rather than the Liberal/Nationals government.

So the usual tactic is to play safe, do nothing, and criticise the other side.

But any move to spell out logically the case for a better deal over the GST carve up to the review committee of former premiers Nick Greiner (NSW) and John Brumby (Victoria) and Adelaide businessman Bruce Carter should not do any harm. It clearly shows the two major parties are effectively on the same page in WA, and it gives Mr McGowan and shadow treasurer Ben Wyatt, who accompanied him, a higher profile.

Labor’s case effectively backed up Mr Barnett’s position with the exception that WA’s reimbursement should not fall below 80 per cent of its contributions, compared with the government’s more modest 75 per cent.

That is designed to avoid a repetition of this year’s experience in which the share drops from 72 to 56 per cent. That’s an actual drop of $600 million. And if the revenue from royalties continues to increase as predicted, the GST share will continue to fall.

Most Western Australians can see the logic in the state’s case. But in a federal system, it becomes a sensitive issue. If one state has a win that means another state has lost out.

One compromise suggestion was that the GST pie be carved up in proportion to a state’s population. That would prevent any sudden changes, and the commonwealth could top up the financially weaker states.

The review committee’s report is expected to go to federal treasurer Wayne Swan before the end of the year. But with a federal election next year, don’t expect anything too radical.

Royalties tighten up

Taxpayers’ money has been flowing into regional Western Australia like never before, thanks to the royalties for regions program. And not before time for some neglected parts of the state.

But according to a review of the grants to local government bodies for a very diverse list of projects, some of the money could have been much better targeted.

That’s a very timely wake-up call because the Western Australian Regional Development Trust, which conducted the review, has identified projects valued at $2 billion just to bring infrastructure in the bush up to a suitable minimum standard. Country roads alone could absorb $800 million immediately.

But the trust’s chairman, Andrew Murray, who prepared the findings and recommendations, has also given this blunt warning to the state’s 109 country councils: “Some shires have an entitlement mentality. The Country Local Government Fund is not a subsidy or shire welfare, the money must be directed to regional development outcomes.”

Mr Murray, a former long-term Democrats senator with an eye for wasteful spending, says that a significant proportion of the $100 million allocated annually for the past three years had been for “shovel-ready” infrastructure projects. That is, work that was effectively ready to start.

But he added: “From 2013 the fund’s expenditure will be outcomes-based and better prioritised and targeted. Value for money and productivity will be important criteria.”

That’s tacit acknowledgment that money has been dished out for borderline activities. It also brings back memories of the reports that some shires were getting their second royalties cheques for projects before the money from the first cheque had even been spent.

Not surprisingly the opposition pounced on the suggestion that some grants had not been as rigorously assessed as they could have been, closely followed by suggestions big amounts had been “pork-barrelled into National Party electorates... ”. That’s a reminder that that royalties’ strategy was a big winner for the Nationals in the 2008 state election.

“The report revealed National Party Leader Brendon Grylls’ Wheatbelt electorate received 31 per cent of CLGF funding, despite containing only 13 per cent of WA’s regional population,” opposition leader Mark McGowan said.

But Mr Murray has flagged that the traditional “she’ll be right” attitude to allocating the money should no longer be tolerated.

“The problem for the ‘fair share’ proponents is that the (fund) should be neither entitlement nor equity-based; the (fund) has to be outcome-based, determined by the intent of the Act.

“Every country local government did (and most probably still do) have an infrastructure backlog, and they legitimately felt entitled to an equitable share of the (fund) but by 2013 all councils will have had a chance to address some of that backlog through the existing allocation system.”

The 43 Wheatbelt councils, some very sparsely populated indeed, make up 39 per cent of the total number of local government bodies. But under the ‘entitlement’ option, they got 31 per cent of the money.  That’s likely to be the ‘high water mark’.

Not that a council’s population should be the sole determining factor. The report noted that actual infrastructure needs, remoteness, area, number of drive-in drive-out (DIDO) and fly-in fly-out (FIFO) workers, and tourists, were also relevant.

The report took issue with the policy to stop direct grants to individual shires from 2013-14, and allocating the money instead on a regional basis.

“The ‘regional’ concept is a blurred one,” the report said. “Many individual councils qualify as ‘sub regions’ or ‘regions’ on their own. These include individual councils with very large areas, country cities like Albany, super-charged economies like the Shire of Roebourne, those country towns designated as SuperTowns, major regional centres or catchments such as the Shire of Katanning, and those councils rated as high growth prospects.”

The local government fund accounts for just nine per cent of the money under the royalties scheme. Most royalties money goes into the headworks infrastructure fund (67 per cent), followed by regional community services (21 per cent) and an initiatives program (one per cent).

But the LG fund’s impact could be more far reaching. Its work has exposed the disparate nature of shire accounting and recording procedures, making comparisons of the merits of projects from even neighbouring shires unnecessarily difficult. These are issues requiring attention if there is to be financially effective cooperation across shires, let alone amalgamation.

The government will accept written responses to 26 recommendations in Mr Murray’s report up until May 11, before deciding how future grants should be allocated.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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