Nahan strikes back on GST

State Treasurer Mike Nahan has blasted the eastern states for their inability to come to what he considers a fair agreement on the distribution of the GST, and defended the state government’s record on economic reform, touting independent public schools and the usage of public private partnerships as two key examples.

The comments came after yesterday’s release of the Commonwealth Grants Commission report revealed a recommendation that Western Australia’s share of the GST fall to below 30 per cent of the amount collected in the state.

Federal Treasurer Joe Hockey said he would consult further on the issue after the meeting of state treasurers yesterday was unable to reach a consensus, leaving the door open for alterations.

Dr Nahan praised his federal counterpart’s handling of the issue, saying Mr Hockey made the right decision in the circumstance.

“When a state like WA, which has been holding the whole economy up for years, gets less than 30 per cent of its share at the time of the collapse of iron ore prices, its simply not fair and equitable,” Dr Nahan said.

“(Other states) want the money but not the costs, that’s simply not acceptable,” he added.

“They have become mendicants living off someone else’s hard work.”

Dr Nahan said WA had made its own luck, and that it had been successful because of the systematic hard work of successive governments over decades.

He said states such as South Australia and Tasmania had pursued destructive economic policies, but some were “profoundly jealous” of WA’s success.

“WA has opened for oil and gas onshore and offshore,” Dr Nahan said, while New South Wales and Victoria were resisting coal seam gas exploration.

“We have the most progressive, open policy towards resources of any place on earth, whereas a recent rating of Victoria’s mining and oil and gas sector rated them below the Democratic Republic of Congo.”

Dr Nahan also rebuked criticism of the state government’s reform agenda, saying it was getting it right on the key issues, including health and education.

He cited the independent schools program developed in WA as a key example, while actions such as the public private partnership at Midland Hospital would save the state more than $1 billion and deliver better services.

Other examples included the NDIS and Gonski, which Dr Nahan said were being delivered ahead of other states off WA’s own initiative.

The path forward

Dr Nahan said Mr Hockey had multiple options to fix the problem this year, including a temporary freeze of the distribution rates, introducing a floor on payments or a once-off grant.

He said that the temporary freeze option on distribution rates had been used before.

If Mr Hockey chose this option, it would avoid the planned $300 million reduction of the distribution that will hit WA this year.

Long-term reform could include moving to a per capita distribution system, with Dr Nahan flagging that an alliance could be built between the big states, including Queensland, Victoria and New South Wales.

Both Victoria and New South Wales currently receive less than they contribute to the system, while Queensland is likely to suffer a similar fate as natural gas exports begin to take off.