07/03/2012 - 11:04

Porter keeping his powder dry

07/03/2012 - 11:04

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The state government’s on track to loosen the strings on Treasury reserves when it needs to – before the next election.

The state government’s on track to loosen the strings on Treasury reserves when it needs to – before the next election.

TREASURER Christian Porter did his best to downplay the latest Treasury report on the state’s financial position, but it remains undeniably healthy despite the Commonwealth Grants Commission threat of a further $1 billion ‘raid’ on revenue.

The surplus for the first half of the financial year came in at a healthy $772 million; Mr Porter chose to report that as $334 million below the surplus for the same period last year. 

And while that may be correct, he overlooked the fact that it was $563 million more than the surplus predicted by Treasury for the full financial year in the mid-year statement just two months ago.

Even allowing for Treasury’s notoriously conservative forecasting record, the actual half-year surplus is a good result. It points to another $1 billion budget surplus, and the timing for the government could not have been better.

Not that Mr Porter wanted to draw attention to that. The Treasury figures came a day after he had railed against the Commonwealth Grants Commission recommendation of a further cut in Western Australia’s share of the goods and services tax revenue over the next four years.

“The $1 billion loss we now face ...  is on top of the $12 billion loss we already knew we were facing – an extra $1 billion,” Mr Porter told parliament. “That will obviously be damaging to the state’s economy ...”

He urged the Commonwealth to freeze WA’s reimbursement of GST revenue at the current 72 per cent level while the state’s case for no further decrease is assessed. And he mounted an argument that anything that checked the state’s economic growth would have national ramifications.

Despite this, the stars remain aligned for WA’s economic growth. Royalty income was up 22 per cent on the same time last year; ironically GST grants were $128 million higher, and, not surprisingly, revenue from payroll tax was up $221 million.

One area of concern was that growth in expenses, at 7.5 per cent, outstripped the growth in revenue, at 4.1 per cent. Higher salaries were the main problem, accounting for 74 per cent of the total increase.

The jump in expenses also worries the opposition, along with the increase in state debt. That is now at $13 billion, which is $934 million more than at the same time last year. Treasury’s report says this is “in line with projected growth” reflected in the mid-year review in December.  

But the opposition isn’t satisfied.

“State debt has increased from $3.7 billion in 2008 to a forecast $16.6 billion this year,” opposition leader Mark McGowan told parliament last month. “The government’s budget indicates it will rise to $23.9 million. Debt is growing at nearly $9 million per day; $370,000 per hour; $6,000 per minute on Mr Barnett’s watch. And you cannot blame a lack of revenue for this incredible increase.”

Expect to hear more of that from the opposition during the year. Mr McGowan says much of the budget surpluses should be used to retire debt, and therefore reduce the interest bill on servicing that debt. The government’s line is that, if the money is well directed at capital works, the benefits from the new structures will serve the community for years to come, justifying paying for them over time.

Meanwhile, the bigger-than-expected surplus just 12 months out from the next election is, as far as Mr Porter is concerned, just what the doctor ordered.

When the pressure comes on to loosen the strings on the Treasury reserves – and that will come soon – there will be enough in the kitty to ease the squeeze for voters on taxes and charges. 

What exquisite timing.

Senate upgrade

JULIA Gillard’s on-off-on approach to entice former NSW premier Bob Carr to the Senate and the foreign affairs portfolio will go down as an exercise in how to make simple things hard. But she will be hoping that all’s well that ends well.

It was Mr Carr’s initial ambition to enter federal politics, and foreign affairs was his forte. State politics got in the way, and he served a record continuous term as NSW premier. But the sudden resignation of Mark Arbib made a casual Senate vacancy available.

Ms Gillard finally confirmed she had approached Mr Carr and, as they say in politics, when the door opens you must be prepared to jump quickly before it closes again.

Mr Carr will bring much-needed experience and political nous to the Gillard government. And The Australian newspaper editorialised on the merits of tapping into the experience of retired premiers who could make a strong contribution to national political debate, through the Senate.

The editorial referred to the Senate currently being filled by timeservers and party and union hacks. That might be somewhat harsh, but there’s no doubt that the toughest ballot for aspiring senators is the party selection process. If they can get one of the top positions on the Liberal or Labor ticket, for example, the actual contest on polling day is a breeze.

Most parties don’t even bother to promote their Senate teams. So I make this challenge: can you name four senators who represent WA in the so-called states’ house?

If you are struggling it’s understandable. They enjoy an extremely low profile, despite some doing a useful job. One of the state’s 12 senators, Chris Evans, is the government’s third most senior minister.

The Australian noted that the previous WA premier, Alan Carpenter, was still relatively young. He had acquired significant experience in government in WA, and at the national level through the COAG meetings. That experience should not be lost to public life. He would be a worthy addition to the Senate.

But why stop at Mr Carpenter? What about other former premiers such as Geoff Gallop (Labor) and Richard Court (Liberal)? Both are still in their early 60s, have vast experience, and would represent the state well in Canberra.

And what about the credentials of other former leaders such as Peter Dowding (Labor), Barry MacKinnon (Liberal) and former deputy premiers such as Ian Taylor (Labor) and Hendy Cowan (National Party)? Mr Cowan’s would be a formidable voice for country WA. All represent a wealth of experience that could be tapped. None has to learn the ropes or would be overawed by being thrust onto the national stage.

Other countries use political experience much better than Australia. Former presidential aspirants John Kerry and John McCain still sit in the US Senate. Former British prime ministers are offered peerages. 

I recall some years ago waiting at Singapore’s Changi Airport for a connecting flight and seeing an Edwardian figure on the television monitor broadcasting a debate from Britain’s House of Lords. It was a former Conservative prime minister Harold Macmillan. Labor’s Harold Wilson was also elevated.

Ms Gillard may well have started something with her appointment of Mr Carr. There’s vast untapped political experience around the states. The Senate chamber would be jolted from its slumber if their collective expertise were exploited in Canberra.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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