❓ Question regarding the impact of declining GST share on Western Australia's revenue, with the Treasurer blaming the federal Labor government for the state's budgetary difficulties due to the Commonwealth Grants Commission's assessment of fiscal relativities.
AnsweredQoN 33Legislative Assembly
QuestionView source ↗
GOODS AND
SERVICES TAX — STATE SHARE
33. Dr M.D. NAHAN to the Treasurer:
I refer to recent
reports about the Commonwealth Grants Commission's assessment of fiscal
relativities between the states and territories that implied further decreases
to WA's GST share. Can the Treasurer please inform the house about the
impacts on the revenue to this state with respect to declining GST shares?
SERVICES TAX — STATE SHARE
33. Dr M.D. NAHAN to the Treasurer:
I refer to recent
reports about the Commonwealth Grants Commission's assessment of fiscal
relativities between the states and territories that implied further decreases
to WA's GST share. Can the Treasurer please inform the house about the
impacts on the revenue to this state with respect to declining GST shares?
AnswerView source ↗
I thank the member for the question. It is a very timely question. About
this time every year the Commonwealth Grants Commission gives to the states, on
an embargoed basis, its relativities for the coming year. That document was
leaked, for the first time in its history, to The West Australian , which ran a front-page news article.
Notwithstanding the leak from the federal government, the state is bound by the
embargo, but it is a very timely point to examine exactly what the effect on
the budget is likely to be. This is the effect that we have already modelled.
If the front-page story of The West
Australian is to be believed, the effect will actually be worse than what
WA Treasury has said over several years would occur. The most important thing
here is that for several years now the Western Australian government has said
that we will fall to a relativity share of around 30 per cent. The commonwealth
government has said that we are crying wolf in that respect and that this will
not happen. Its own report now suggests that not only were we right and they
were wrong, but also things are actually going to be worse than we initially
assessed.
Quite a few
remarkable things were said yesterday by the Leader of the Opposition in his
speech. He said that this government cannot continue to use the commonwealth
government as an excuse. He said the government has constantly used the
commonwealth as an excuse. The Liberal–National government considers it
fair and appropriate and, indeed, our duty as Western Australians to blame the
federal government for draining billions of dollars from the budget of this
state. We see that as our duty for the simple reason that the budgetary
difficulties that are being experienced in Western Australia are being caused
by the federal Labor government. What is absolutely fascinating is that every
time this issue is raised, the Leader of the Opposition talks about the
commonwealth government. It is the federal Labor government and the federal
Labor Prime Minister and Treasurer who are overseeing the pillaging of Western
Australia's state budget. I have shown this graph before. It is one
very interesting way to look at this. The Western Australian Treasury says that
over the next four years Western Australia will lose $12.3 billion of revenue
that is rightfully owned by the people of this state because of the federal
Labor government.
Another very good way to look at this is to acknowledge that
there have been winners and losers in the Grants Commission process over
several decades now. During certain periods states have been beneficiaries or
donors. I asked WA Treasury to look back to about 1988 and work out when WA was
a beneficiary and when it was a donor; when it was a beneficiary, how much it
was getting; and, when it was a donor, how much was it donating. This is the
graph that was produced in response. Going back to 1988, we can see that in
adjusted dollars we were receiving about $1 billion worth of benefit. In fact,
that was one of the high points of Western Australia being a beneficiary under
the Grants Commission system in the days when the money coming in was federal
assistance grants.
Mr
C.J. Barnett : It's about the time Labor won the election, isn't
it?
Mr
C.C. PORTER : Indeed; lucky them. Although one of the reasons WA was a beneficiary
for a long time is that that was the peak of the tariff system in Australia. We
became less of a beneficiary as tariffs were decreased. The system was
rewarding us for the negative impact that high tariffs were having on our
export economy. The two dotted lines on this graph, which unfortunately I had
to draw over the lamination myself, represent the period in which Labor was in
government. During that period, at some points we were a beneficiary and at
some points we were losing money. The swings and roundabouts that occurred
during the period in which Labor was in government were nowhere near as
volatile as what we are about to experience. This was precisely what the former
Leader of the Opposition warned about when he was Treasurer. Those downward red
bars represent the sheer loss of money that will be taken out of the Western
Australian economy over the next several years, as is happening now.
Members opposite—in particular, the Leader of the
Opposition—are, in effect, insinuating that we should go soft on their
Labor buddies in the federal government and not use them as an excuse or blame
them for this absolutely outrageous state of affairs. The Leader of the
Opposition's friends are on the verge of tearing $3 billion out of this
state economy in one year—$3 billion off the taxpayers of Western
Australia in one year! He tells us that we should not point that out and that
we should not blame them for that $3 billion. He tells us that we should not
indicate fairly to the people of Western Australia that that is the single
major constraint operating on the state budget. The future of Western Australia
as a growth economy lies in fixing this problem. If that is being a bit hard on
the Leader of the Opposition's friends in federal Parliament, whichever
of them look like being leader, that is too bad, because that is the truth. We
are blaming them because it is their fault.
Mr B.S. Wyatt : Can
you table that?
Mr C.C. PORTER : Of
course. I table that graph.
[See paper 4529.]
this time every year the Commonwealth Grants Commission gives to the states, on
an embargoed basis, its relativities for the coming year. That document was
leaked, for the first time in its history, to The West Australian , which ran a front-page news article.
Notwithstanding the leak from the federal government, the state is bound by the
embargo, but it is a very timely point to examine exactly what the effect on
the budget is likely to be. This is the effect that we have already modelled.
If the front-page story of The West
Australian is to be believed, the effect will actually be worse than what
WA Treasury has said over several years would occur. The most important thing
here is that for several years now the Western Australian government has said
that we will fall to a relativity share of around 30 per cent. The commonwealth
government has said that we are crying wolf in that respect and that this will
not happen. Its own report now suggests that not only were we right and they
were wrong, but also things are actually going to be worse than we initially
assessed.
Quite a few
remarkable things were said yesterday by the Leader of the Opposition in his
speech. He said that this government cannot continue to use the commonwealth
government as an excuse. He said the government has constantly used the
commonwealth as an excuse. The Liberal–National government considers it
fair and appropriate and, indeed, our duty as Western Australians to blame the
federal government for draining billions of dollars from the budget of this
state. We see that as our duty for the simple reason that the budgetary
difficulties that are being experienced in Western Australia are being caused
by the federal Labor government. What is absolutely fascinating is that every
time this issue is raised, the Leader of the Opposition talks about the
commonwealth government. It is the federal Labor government and the federal
Labor Prime Minister and Treasurer who are overseeing the pillaging of Western
Australia's state budget. I have shown this graph before. It is one
very interesting way to look at this. The Western Australian Treasury says that
over the next four years Western Australia will lose $12.3 billion of revenue
that is rightfully owned by the people of this state because of the federal
Labor government.
Another very good way to look at this is to acknowledge that
there have been winners and losers in the Grants Commission process over
several decades now. During certain periods states have been beneficiaries or
donors. I asked WA Treasury to look back to about 1988 and work out when WA was
a beneficiary and when it was a donor; when it was a beneficiary, how much it
was getting; and, when it was a donor, how much was it donating. This is the
graph that was produced in response. Going back to 1988, we can see that in
adjusted dollars we were receiving about $1 billion worth of benefit. In fact,
that was one of the high points of Western Australia being a beneficiary under
the Grants Commission system in the days when the money coming in was federal
assistance grants.
Mr
C.J. Barnett : It's about the time Labor won the election, isn't
it?
Mr
C.C. PORTER : Indeed; lucky them. Although one of the reasons WA was a beneficiary
for a long time is that that was the peak of the tariff system in Australia. We
became less of a beneficiary as tariffs were decreased. The system was
rewarding us for the negative impact that high tariffs were having on our
export economy. The two dotted lines on this graph, which unfortunately I had
to draw over the lamination myself, represent the period in which Labor was in
government. During that period, at some points we were a beneficiary and at
some points we were losing money. The swings and roundabouts that occurred
during the period in which Labor was in government were nowhere near as
volatile as what we are about to experience. This was precisely what the former
Leader of the Opposition warned about when he was Treasurer. Those downward red
bars represent the sheer loss of money that will be taken out of the Western
Australian economy over the next several years, as is happening now.
Members opposite—in particular, the Leader of the
Opposition—are, in effect, insinuating that we should go soft on their
Labor buddies in the federal government and not use them as an excuse or blame
them for this absolutely outrageous state of affairs. The Leader of the
Opposition's friends are on the verge of tearing $3 billion out of this
state economy in one year—$3 billion off the taxpayers of Western
Australia in one year! He tells us that we should not point that out and that
we should not blame them for that $3 billion. He tells us that we should not
indicate fairly to the people of Western Australia that that is the single
major constraint operating on the state budget. The future of Western Australia
as a growth economy lies in fixing this problem. If that is being a bit hard on
the Leader of the Opposition's friends in federal Parliament, whichever
of them look like being leader, that is too bad, because that is the truth. We
are blaming them because it is their fault.
Mr B.S. Wyatt : Can
you table that?
Mr C.C. PORTER : Of
course. I table that graph.
[See paper 4529.]
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