Politics outweighs logic on GST

If Colin Barnett was hoping for a few sweeteners during Joe Hockey’s visit last week, he may have been left with a bitter taste in his mouth.

PREMIER Colin Barnett might have the logic on his side when he calls for a revision of the formula for the redistribution of revenue raised by the Goods and Services Tax, but it is clear from comments by opposition treasury spokesman Joe Hockey that he does not have the numbers.

There is no surprise that Mr Barnett’s argument for a better deal has fallen on deaf ears when it comes to Labor-governed states such as South Australia and Tasmania, which are big beneficiaries from the present plan.

It would be an even bigger surprise if a federal Labor government agreed to a new formula in which Labor states were disadvantaged at the expense of coalition-governed states such as Western Australia, especially with a federal election due next year. That’s just politics.

So the premier might have been expecting a more sympathetic response from his own side when Mr Hockey visited Perth last week. Such visits are usually aimed at drumming up support for a change of government in Canberra. But if that was Mr Hockey’s goal, he certainly exhibited a novel strategy.

In a breakfast speech, Mr Hockey knocked any notion of support for a ‘floor’ in the redistribution formula on the head. Mr Barnett had been pressing for a minimum of 75 cents in every dollar raised in WA under the GST being returned to the state. This year, the actual figure is 55 cents, and in three years it is tipped to slide to just 25 cents from each GST-raised dollar returning to WA. 

Mr Hockey normally radiates an affable easy-going persona on TV that is attractive to viewers. However, his message at the business breakfast was that WA had been a beneficiary of Commonwealth grants over the years and it was now time for the state to do some ‘heavy lifting’ to help other states that are struggling. Nothing affable there.

“What do we say to those people, ‘Oh guys, don’t worry we’re just going to rip more money out of you and send it over to the west’. It’s not going to work,” Mr Hockey said. 

“It’s time for us over here (WA), as Australians, to give.”

Mr Hockey went further – much to the delight, no doubt, of WA Labor strategists who might consider his advice in its advertising at next year’s state and federal elections – when he suggested toll roads might be a solution to the state’s financial problems.

“In NSW and Victoria and Queensland we have tolls to address some of the congestion problems because there’s not a big enough pool of public sector money to address some of these big infrastructure needs,” Mr Hockey said. “But that’s up to the West Australian government.”

It is a wonder Mr Hockey didn’t go the whole hog and throw-in gambling as an additional source of revenue.

As WA bans poker machines from clubs and hotels – with the exception of the Packer-owned casino at Burswood – it denies itself hundreds of millions of dollars in extra revenue.

Other states, including Mr Hockey’s home state of NSW, get both the millions and the resulting social problems caused by the thousands of gamblers. Fortunately neither the Labor nor Liberal parties in WA support the poker machine ‘solution’.

The bottom line, however, is that Mr Hockey knows it is counterproductive to support moves that effectively reef money off some states in a pre-election year; it’s all about votes.

Mr Barnett has switched his campaign for a more equitable deal by pushing for a base 60 per cent of the GST revenue being allocated on a per-head basis among the states, with the rest being carved up according to need. Queensland, NSW and Victoria have lent tacit support.

What seems to have been lost is the logic behind a new approach, which, if followed to its conclusion could help increase the economic pie, with benefits all round.

The key revolves around one word – productivity. The resources development and investment, pouring into WA and on the launching pad, have the capacity to provide thousands of extra jobs and export income at a time when the news from other states is of industries closing down because they are no longer competitive.

Money is the only brake on the capacity of the state to provide the necessary infrastructure – ports, power, roads, housing, schools and hospitals – for these developments. That’s aggravated by the millions being siphoned-off for the weaker states. How the money is spent there is in the lap of the gods.  

Productivity seems to have taken a back seat in the national debate in recent years. Logic demands that it’s time for a comeback.  

Centre- left reunion

AT its peak it was one of the most influential groupings in the Hawke-Keating Labor governments from 1983-96, and counted some of the most significant ministers among its members.

The exploits of Labor’s centre-left faction were recalled when almost 60 of its devotees gathered for a reunion of the pressure group in Perth recently. The faction had been formed at a meeting in Adelaide in 1984.

Former Senate president and WA Labor secretary, Michael Beahan, who attended the first meeting, said the faction was formed after many ALP members had been incensed at effectively being locked out of the decision-making process by the ‘authoritarian tactics’ of the major left and right factions at the 1982 national conference.

The faction included: the former federal Labor leader Bill Hayden; Peter Walsh (former finance minister); John Dawkins (trade and later treasurer); Peter Cook (industrial relations); Neal Blewett (health); John Button (industry); Barry Jones (science); Michael Duffy (attorney-general); Peter Morris (transport); Susan Ryan (education); and Mick Young (special minister of state).

Other early members included current deputy prime minister Wayne Swan, who was a ministerial staffer in the 1980s, and Peter Beattie, who went on to become Queensland premier. Current Defence Minister Stephen Smith was also a member at one stage.

Mr Beahan, who spoke at the reunion, said the faction had held the balance of power within Labor ranks from 1986 through to the Keating years, which ended in 1996.

He said the faction used its numbers to moderate some of the policies being pushed by the Right and Left groups. These included the opening up of the retail side of telecommunications to competition, and moderating the privatisation of the airline industry.

It was most influential in South Australia and WA, but always struggled with the lack of a strong union base. Supporters in WA included the Builders Labourers Federation, which later merged into the Constructiion, Forestry, Mining and Energy Union, and the Transport Workers Union.

Its influence started to wane when several of its more senior MPs retired from politics, and the party went into opposition in Canberra after John Howard (Liberal) became prime minister.