16/12/2010 - 00:00

States’ rights strategy pays off for Barnett

16/12/2010 - 00:00

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WHEN Colin Barnett chose to play the states’ rights card just before Christmas 2009 it seemed like a strategy with a hint of desperation.

States’ rights strategy pays off for Barnett

WHEN Colin Barnett chose to play the states’ rights card just before Christmas 2009 it seemed like a strategy with a hint of desperation.

While sovereignty always plays well in Western Australia, the state premier seemed to have a weak hand.

His party relied on the WA Nationals to hold power by a slim margin whereas his federal counterpart, then prime minister Kevin Rudd, had a massive majority and seemingly plenty of popular support for his centralising plans.

Within weeks of reversing its previously cosy dealings with Mr Rudd’s government, WA was being portrayed as a wrecker for blocking plans for a federal health takeover. At the same time, Mr Barnett appeared to be bleating about being short-changed on GST while going cap in hand to Canberra for major project funding.

None of this seemed to offer a particularly powerful position.

Even industry was wary of this political tongue poking across the Nullarbor when, in early March, Mr Barnett pre-empted any thought of the state giving up mining royalties during conjecture about a resource rent tax coming with the proposed Henry Tax Reform.

Yet Mr Barnett has emerged from 2010 relatively unscathed by his stubborn refusal to give up what is rightfully WA’s.

In contrast, his federal rivals have been battered and nearly destroyed by the failure of their grand policies of tax and takeovers trussed up in the flag of reform.

The WA premier was hardly a central figure in the Resource Super Profits Tax debate, but during Mr Rudd’s surprise assault the industry was happy to have any friend it could get. Mr Barnett dug his heels in and reiterated his disdain for any idea that the state would give up control of its mining royalties.

In fact, he further entrenched the state’s position by negotiating a significant increase in royalties paid by the iron ore majors BHP Billiton and Rio Tinto to end historical discounts on certain types of production.

In the middle of the mining tax debate, the state showed it was still an important player.

However, this matter has not fully played out.

The WA government may become further embroiled in the tax debate next year if a constitutional challenge takes place, as Mr Barnett has threatened. In the interim, though, the relative positions of power have shifted dramatically since the mining tax debate started.

Mr Rudd was deposed by his own party – a dramatic event in Australian political history – and replaced by Julia Gillard, who clung to power with the slimmest of electoral margins.

Ms Gillard’s more consultative approach may find her more friends in industry but she is also racing against time as the once Labor landscape across the federation is being chipped away by the Liberals.

The conservatives have won Victoria, with Ted Baillieu taking power there recently. Already he is putting up obstacles to federal plans such as the mechanisms required for the roll-out to the National Broadband Network.

That is not to say Mr Barnett’s position is unassailable. There are plenty of issues that are not clouded by state-versus-federal positioning. The development of Oakajee port looks fragile, the sports stadium lingers as a festering sore and the cost of other infrastructure continues to rise.

But he goes into Christmas knowing he is no longer alone facing a powerful adversary.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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