As the Productivity Commission continues its roadshow around the country, Put WA First Secretary, Peter Leigh, provides his thoughts on the recent hearing in Perth.
The only chance Western Australia has of seeing an improvement in the way the GST is shared lies with a positive outcome from the Productivity Commission study on Horizontal Fiscal Equalisation (HFE).
Federal Treasurer, Scott Morrison, set up the inquiry and last week the Deputy Chair of the Commission, Karen Chester and Commissioner Jonathon Coppel ventured out from their Melbourne headquarters to conduct public hearings in Perth.
The Commission proposes a change in the HFE model to move away from full equalization, which is the process of bringing all states to the same level.
The CCI, Put WA First, the Western Australian Government, the National Party and the Liberal Party all support the Commission’s proposal to Equalise to the Average.
This means instead of bringing every state to the same level, they would be raised to at least the average of all states.
This would have meant an increase of $3.6b for WA this year, compared to the full equalization model.
Other states would lose a combined $3.6b.
All parties recognised ditching all equalisation would not get any support.
What differed was the approach to transitioning to the new model which ranged from the Western Australian Government’s proposal to transition over three years by gradually increasing WA’s rate to Put WA First call for an immediate changeover.
All saw the need for the Commonwealth to contribute between $2b and $5b to support the other Australian states through the transition period.
The CCI tabled data showing the Equalise to the Average model returns the distribution of GST to the levels experienced before the construction boom.
WA’s presenters left the Commissioners in no doubt there is broad agreement the system is broken.
The Commissioners also heard community anger is rising over the lack of action.
Some of the key messages highlighted by the different presenters were the impact of remoteness and how this impacts the cost of delivering infrastructure and services; the impact of the construction boom which saw the State’s population grow by 30%; and the Commonwealth Grants Commission’s inability to accommodate these things in their GST distribution model.
What is surprising is these problems were accepted by a Grants Commission that includes a member from Western Australia who surely must have been aware of the issues.
Both the State Government and the Liberal Party bemoaned the randomness and complexity of the current model comparing it to a black box where it is not possible to understand the answers produced from the inputs provided.
Individual presenters highlighted how reduced Government revenue was impacting people across the State from increased costs and lost opportunities.
It was interesting to sit through the process as somewhat of an outsider to see:
- The difference between being in Government and not. The Treasurer, Ben Wyatt was supported by four senior Treasury Officials and other attendees while Terry Redman from the National Party and Mike Nahan from the Liberal Party were presenting alone
- The media were only interested in the first one or two presentations each day
- The mainstream political parties were not interested in other viewpoints
Now the big test is how the Commissioners balance the call for change they heard in Western Australia against the screams for the status quo they will hear when they meet in Melbourne, Adelaide, Darwin and Hobart.
Even if they stand-up to the pressure and hold their main recommendation to move to an Equalise to the Average model, the bigger test is to see if the Federal Government has the intestinal fortitude to make this change.
When the Deputy Leader of the Liberal Party and a WA Federal Member Julie Bishop say only in a parallel universe would the Federal Government introduce a change that would benefit WA at the expense of the other states, it can only mean one of two things.
Either the Government will not do anything or they have already worked out they need to find the money to top up the other States.
It highlights once again why Western Australia needs an independent voice in Canberra looking after our State’s interests.