02/09/2010 - 00:00

Resource tax sealed Labor’s fate

02/09/2010 - 00:00


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Not that anyone needed reminding, but the federal election clearly showed the divide between east and west is as wide as ever.

THE federal election represents a major watershed in the power equation between Western Australia and the populous states that make up the rest of the Commonwealth.

On the one hand, the state that enjoys the strongest economic growth resoundingly rejected the Labor Party, which promised a new tax on the resource sector.

But that result has raised the question in some quarters in the east: why isn’t WA prepared to share its wealth with the rest of the country?

The premier, Colin Barnett, and the miners would say that the state already does share some of its wealth. But that doesn’t cut the mustard among some decisionmakers.

In fact one Sydney source described the WA reaction to the proposed resource tax as evidence of a new sense of “selfishness” in the west.

A former senior politician in Adelaide also weighed in, saying it showed a surge of “redneckism” in the state, similar to the position in Queensland during the Bjelke-Petersen era.

Hardly a ringing endorsement of a state where the federal election vote was out of step with the bulk of the rest of the country.

In anyone’s book, WA voted strongly for the Liberals, which rejected the mining tax plan. They got a whopping 47 per cent of the state vote, compared with 39.5 per cent nationally. Labor’s vote slumped to 31.6 per cent ( 38.4 per cent nationally) and the Greens picked up 12.7 per cent ( 11.4 per cent).

So the sentiment of the majority of voters is pretty clear.

But is it evidence of ‘selfishness’ – that Western Australians are unwilling to share some of their good fortune, linked with the state’s mineral wealth, with their cousins in the east?

The first hurdle the supporters of the selfish line have to clear is the way in which the proposed tax was introduced.

It was one of the few recommendations from the Henry Tax Review to be accepted by then prime minister, Kevin Rudd, and Treasurer Wayne Swan.

Knowing there would be a backlash from the mining industry, they sugar coated the news with promises of a cut in the company tax rate, and improved superannuation for the workforce.

The decision would hardly be a vote winner in the resource states of WA and Queensland, but that’s not where elections are decided. It was anticipated to be a massive plus in the populous states such as NSW and Victoria.

And when Andrew Forrest and Gina Rinehart – neither considered short of a bob – featured prominently in protests against the tax, the view of WA as selfish on the issue was probably confirmed.

But as Mr Barnett has said many times, WA is kicking in to the other states through a reduced refund from its goods and services tax contribution.

And that will only increase, unless the Commonwealth Grants Commission reviews its formula for state payments.

Mr Barnett has also said there could be a case for companies like BHP Billiton and Rio Tinto – which are indeed making super profits on a non-renewable resource – paying a surcharge on their company tax rates.

Even when Julia Gillard brokered a compromise deal, it failed to placate the industry in WA.

What’s good for BHP Billiton and Rio Tinto isn’t necessarily to the liking of the smaller operators.

And that’s the way it played out.

The first mistake here is that, either through ignorance or arrogance – or a mix of both – Labor committed the cardinal error of announcing a new tax only months before going to the polls.

The second mistake was assuming that the company tax cuts and improved superannuation would more than cancel out the resource tax downside among voters.

Does that make Western Australians “selfish” and “rednecks”, or simply voters who don’t see why their wealth should be plundered when no strong case has been presented?

And whose taxpayers are already kicking in to help other struggling states through the GST payments?

And what impact will that have on the state’s somewhat already limited political clout in Canberra?

Given the fact that neither side won a ringing endorsement at the election, the answer might still be some way off.

But one fact that should not be forgotten. The federal government must be far more astute about new taxes, where the impact will be felt severely on some states, and lightly on others, if it is to avoid being punished at the polls.

Greens big winners

THE Greens may have failed to emulate their stunning victory in the Fremantle seat at last year’s state by-election, but they were the undisputed winners at the federal poll.

The party gained 1.2 million votes Australia wide, and will have the balance of power in the new Senate from July next year.

In WA, the Greens recorded their best-ever result. And their successes were split evenly between Labor and Liberal strongholds.

For example, the party won almost 17.5 per cent of the vote in the traditional Labor seat of Fremantle – where the federal boundaries cover a much bigger area than for its state counterpart. That’s not as good as winning the seat at the state level, but a strong vote nevertheless.

The next best vote for the Greens was in Julie Bishop’s blue ribbon Liberal seat of Curtin. The party’s policies were appealing to 17.3 per cent of voters.

But the support tailed off in regional seats. The lowest vote was in Canning, stretching from Armadale to Mandurah, where the party gained just 7.9 per cent. It wasn’t much better in O’Connor (8.6 per cent) or the new seat of Durack (9 per cent), which takes in a big chunk of northern mining through the Pilbara, and into the Kimberley.

The Greens’ environment policies have obvious appeal. So would the commitment to abolish university and Tafe fees, although the costings would present a challenge. The plan for a new formula for funding private schools might cause some concern, especially in Curtin with its concentration of colleges.

Support for gay marriage has been given prominence. A ban on increased coal production would apply alongside an end to uranium exploration, let alone uranium mining.

But while the Labor and Liberal parties slugged it out over the merits of Labor’s planned new resource tax, the Greens approach went largely unnoticed. They not only support a new tax, they think it should be stiffer.

An election-eve Rotary Club breakfast in South Perth was asked why the media hadn’t given greater prominence to the Greens’ general policies, not just their environmental platform, during the campaign.

Perhaps there’s an argument for the Greens to be in the leaders’ debate at the next election. But the policies are on the party’s website for all to see.

• Peter Kennedy is ABC TV's state political reporter.







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