❓ Mr. Hyde questions the Treasurer about the impact of diminishing GST revenue on Western Australia's economic potential. The Treasurer highlights the significant financial losses due to the Commonwealth Grants Commission's redistribution, hindering infrastructure development and productivity growth.
AnsweredQoN 587Legislative Assembly
QuestionView source ↗
GOODS AND SERVICES TAX - RECEIPTS
Can the Treasurer give some detail on how Western Australia’s diminishing share of goods and services tax receipts from the federal government risks the full realisation of the state’s incredible economic potential? Mr E.S. RIPPER
Can the Treasurer give some detail on how Western Australia’s diminishing share of goods and services tax receipts from the federal government risks the full realisation of the state’s incredible economic potential? Mr E.S. RIPPER
AnswerView source ↗
This state has tremendous economic potential. For a long time, Western Australia has had the nation’s single most important resource project, the North West Shelf, which is liquefied natural gas project 1. We now have state and commonwealth approvals for the Pluto project, which is LNG project 2. LNG project 3 - Gorgon - has received its environmental approvals, and we are working on projects 4 and 5 with our Northern Development Task Force. However, all this growth will bring forward tremendous infrastructure requirements. I draw to the attention of all members some disturbing figures. I refer to a letter to The Australian Financial Review , dated yesterday, from Rory Robertson, interest rate strategist for Macquarie Debt Markets. Quoting Australian Bureau of Statistics figures, Mr Robertson writes - . . . Canberra’s effective funding of state budgets - at 4.9 per cent of GDP in 2006-07 - is as low as it has been in three decades. That is the situation across Australia, but the position for Western Australia is even worse. I previously advised the house that we would be looking at a reduction in our share of GST from 10.1 per cent of GST now to 7.5 per cent in 2010-11, losing at that point $1.4 billion from state finances as a result of Commonwealth Grants Commission punishment for our economic success. What has been concerning me is the growth in this phenomenon of the Grants Commission taking away our share of commonwealth grants as our economy outperforms those of other states. With my staff, I have been looking at what would happen over eight years if current circumstances continue. The result is frightening. After eight years of this pattern we would see our share of GST drop to 5.9 per cent of GST for 10.3 per cent of the Australian population. The total loss to state finances over those eight years would be $12.8 billion - $12.8 billion! - removed from our capacity to build the infrastructure to keep the economic growth going, which is supporting the nation’s export performance, which is supporting the federal budget. That is a matter that ought to be of great concern to all members of this house. It combines with another set of concerns that have been raised by JP Morgan’s chief economist, Stephen Walters, who reportedly sent a note to clients today stating that he believes the Reserve Bank will lift interest rates again next month. He then goes on to say what he thinks are the factors that will cause another interest rate rise, despite John Howard’s promise before the 2004 election. He says - Core inflation is still rising, owing to the tight labour market and lingering capacity constraints. Also, food prices are soaring, energy prices are high, and housing and utility prices are climbing. He then goes on to make a very important point, which takes me back to my infrastructure argument. He says - Real GDP growth has averaged 3.4% per annum - However, while real GDP growth has averaged 3.4% per annum - potential growth has been sliding, mainly owing to suboptimal productivity growth. Suboptimal productivity growth is preventing this country from realising its full potential. What helps drive productivity growth? Good infrastructure provision. What is hampering our ability to make that good infrastructure provision? The amount of $12.8 billion being taken out of our finances by the Commonwealth Grants Commission - punishing us for the huge economic success that is Western Australia and further punishment for the huge economic potential that awaits us in the future.
Mr E.S. RIPPER replied: This state has tremendous economic potential. For a long time, Western Australia has had the nation’s single most important resource project, the North West Shelf, which is liquefied natural gas project 1. We now have state and commonwealth approvals for the Pluto project, which is LNG project 2. LNG project 3 - Gorgon - has received its environmental approvals, and we are working on projects 4 and 5 with our Northern Development Task Force. However, all this growth will bring forward tremendous infrastructure requirements. I draw to the attention of all members some disturbing figures. I refer to a letter to The Australian Financial Review , dated yesterday, from Rory Robertson, interest rate strategist for Macquarie Debt Markets. Quoting Australian Bureau of Statistics figures, Mr Robertson writes - . . . Canberra’s effective funding of state budgets - at 4.9 per cent of GDP in 2006-07 - is as low as it has been in three decades. That is the situation across Australia, but the position for Western Australia is even worse. I previously advised the house that we would be looking at a reduction in our share of GST from 10.1 per cent of GST now to 7.5 per cent in 2010-11, losing at that point $1.4 billion from state finances as a result of Commonwealth Grants Commission punishment for our economic success. What has been concerning me is the growth in this phenomenon of the Grants Commission taking away our share of commonwealth grants as our economy outperforms those of other states. With my staff, I have been looking at what would happen over eight years if current circumstances continue. The result is frightening. After eight years of this pattern we would see our share of GST drop to 5.9 per cent of GST for 10.3 per cent of the Australian population. The total loss to state finances over those eight years would be $12.8 billion - $12.8 billion! - removed from our capacity to build the infrastructure to keep the economic growth going, which is supporting the nation’s export performance, which is supporting the federal budget. That is a matter that ought to be of great concern to all members of this house. It combines with another set of concerns that have been raised by JP Morgan’s chief economist, Stephen Walters, who reportedly sent a note to clients today stating that he believes the Reserve Bank will lift interest rates again next month. He then goes on to say what he thinks are the factors that will cause another interest rate rise, despite John Howard’s promise before the 2004 election. He says - Core inflation is still rising, owing to the tight labour market and lingering capacity constraints. Also, food prices are soaring, energy prices are high, and housing and utility prices are climbing. He then goes on to make a very important point, which takes me back to my infrastructure argument. He says - Real GDP growth has averaged 3.4% per annum - However, while real GDP growth has averaged 3.4% per annum - potential growth has been sliding, mainly owing to suboptimal productivity growth. Suboptimal productivity growth is preventing this country from realising its full potential. What helps drive productivity growth? Good infrastructure provision. What is hampering our ability to make that good infrastructure provision? The amount of $12.8 billion being taken out of our finances by the Commonwealth Grants Commission - punishing us for the huge economic success that is Western Australia and further punishment for the huge economic potential that awaits us in the future.
This state has tremendous economic potential. For a long time, Western Australia has had the nation’s single most important resource project, the North West Shelf, which is liquefied natural gas project 1. We now have state and commonwealth approvals for the Pluto project, which is LNG project 2. LNG project 3 - Gorgon - has received its environmental approvals, and we are working on projects 4 and 5 with our Northern Development Task Force. However, all this growth will bring forward tremendous infrastructure requirements. I draw to the attention of all members some disturbing figures. I refer to a letter to The Australian Financial Review , dated yesterday, from Rory Robertson, interest rate strategist for Macquarie Debt Markets. Quoting Australian Bureau of Statistics figures, Mr Robertson writes - . . . Canberra’s effective funding of state budgets - at 4.9 per cent of GDP in 2006-07 - is as low as it has been in three decades. That is the situation across Australia, but the position for Western Australia is even worse. I previously advised the house that we would be looking at a reduction in our share of GST from 10.1 per cent of GST now to 7.5 per cent in 2010-11, losing at that point $1.4 billion from state finances as a result of Commonwealth Grants Commission punishment for our economic success. What has been concerning me is the growth in this phenomenon of the Grants Commission taking away our share of commonwealth grants as our economy outperforms those of other states. With my staff, I have been looking at what would happen over eight years if current circumstances continue. The result is frightening. After eight years of this pattern we would see our share of GST drop to 5.9 per cent of GST for 10.3 per cent of the Australian population. The total loss to state finances over those eight years would be $12.8 billion - $12.8 billion! - removed from our capacity to build the infrastructure to keep the economic growth going, which is supporting the nation’s export performance, which is supporting the federal budget. That is a matter that ought to be of great concern to all members of this house. It combines with another set of concerns that have been raised by JP Morgan’s chief economist, Stephen Walters, who reportedly sent a note to clients today stating that he believes the Reserve Bank will lift interest rates again next month. He then goes on to say what he thinks are the factors that will cause another interest rate rise, despite John Howard’s promise before the 2004 election. He says - Core inflation is still rising, owing to the tight labour market and lingering capacity constraints. Also, food prices are soaring, energy prices are high, and housing and utility prices are climbing. He then goes on to make a very important point, which takes me back to my infrastructure argument. He says - Real GDP growth has averaged 3.4% per annum - However, while real GDP growth has averaged 3.4% per annum - potential growth has been sliding, mainly owing to suboptimal productivity growth. Suboptimal productivity growth is preventing this country from realising its full potential. What helps drive productivity growth? Good infrastructure provision. What is hampering our ability to make that good infrastructure provision? The amount of $12.8 billion being taken out of our finances by the Commonwealth Grants Commission - punishing us for the huge economic success that is Western Australia and further punishment for the huge economic potential that awaits us in the future.
It combines with another set of concerns that have been raised by JP Morgan’s chief economist, Stephen Walters, who reportedly sent a note to clients today stating that he believes the Reserve Bank will lift interest rates again next month. He then goes on to say what he thinks are the factors that will cause another interest rate rise, despite John Howard’s promise before the 2004 election. He says - Core inflation is still rising, owing to the tight labour market and lingering capacity constraints. Also, food prices are soaring, energy prices are high, and housing and utility prices are climbing. He then goes on to make a very important point, which takes me back to my infrastructure argument. He says - Real GDP growth has averaged 3.4% per annum - However, while real GDP growth has averaged 3.4% per annum - potential growth has been sliding, mainly owing to suboptimal productivity growth. Suboptimal productivity growth is preventing this country from realising its full potential. What helps drive productivity growth? Good infrastructure provision. What is hampering our ability to make that good infrastructure provision? The amount of $12.8 billion being taken out of our finances by the Commonwealth Grants Commission - punishing us for the huge economic success that is Western Australia and further punishment for the huge economic potential that awaits us in the future.
Mr E.S. RIPPER replied: This state has tremendous economic potential. For a long time, Western Australia has had the nation’s single most important resource project, the North West Shelf, which is liquefied natural gas project 1. We now have state and commonwealth approvals for the Pluto project, which is LNG project 2. LNG project 3 - Gorgon - has received its environmental approvals, and we are working on projects 4 and 5 with our Northern Development Task Force. However, all this growth will bring forward tremendous infrastructure requirements. I draw to the attention of all members some disturbing figures. I refer to a letter to The Australian Financial Review , dated yesterday, from Rory Robertson, interest rate strategist for Macquarie Debt Markets. Quoting Australian Bureau of Statistics figures, Mr Robertson writes - . . . Canberra’s effective funding of state budgets - at 4.9 per cent of GDP in 2006-07 - is as low as it has been in three decades. That is the situation across Australia, but the position for Western Australia is even worse. I previously advised the house that we would be looking at a reduction in our share of GST from 10.1 per cent of GST now to 7.5 per cent in 2010-11, losing at that point $1.4 billion from state finances as a result of Commonwealth Grants Commission punishment for our economic success. What has been concerning me is the growth in this phenomenon of the Grants Commission taking away our share of commonwealth grants as our economy outperforms those of other states. With my staff, I have been looking at what would happen over eight years if current circumstances continue. The result is frightening. After eight years of this pattern we would see our share of GST drop to 5.9 per cent of GST for 10.3 per cent of the Australian population. The total loss to state finances over those eight years would be $12.8 billion - $12.8 billion! - removed from our capacity to build the infrastructure to keep the economic growth going, which is supporting the nation’s export performance, which is supporting the federal budget. That is a matter that ought to be of great concern to all members of this house. It combines with another set of concerns that have been raised by JP Morgan’s chief economist, Stephen Walters, who reportedly sent a note to clients today stating that he believes the Reserve Bank will lift interest rates again next month. He then goes on to say what he thinks are the factors that will cause another interest rate rise, despite John Howard’s promise before the 2004 election. He says - Core inflation is still rising, owing to the tight labour market and lingering capacity constraints. Also, food prices are soaring, energy prices are high, and housing and utility prices are climbing. He then goes on to make a very important point, which takes me back to my infrastructure argument. He says - Real GDP growth has averaged 3.4% per annum - However, while real GDP growth has averaged 3.4% per annum - potential growth has been sliding, mainly owing to suboptimal productivity growth. Suboptimal productivity growth is preventing this country from realising its full potential. What helps drive productivity growth? Good infrastructure provision. What is hampering our ability to make that good infrastructure provision? The amount of $12.8 billion being taken out of our finances by the Commonwealth Grants Commission - punishing us for the huge economic success that is Western Australia and further punishment for the huge economic potential that awaits us in the future.
This state has tremendous economic potential. For a long time, Western Australia has had the nation’s single most important resource project, the North West Shelf, which is liquefied natural gas project 1. We now have state and commonwealth approvals for the Pluto project, which is LNG project 2. LNG project 3 - Gorgon - has received its environmental approvals, and we are working on projects 4 and 5 with our Northern Development Task Force. However, all this growth will bring forward tremendous infrastructure requirements. I draw to the attention of all members some disturbing figures. I refer to a letter to The Australian Financial Review , dated yesterday, from Rory Robertson, interest rate strategist for Macquarie Debt Markets. Quoting Australian Bureau of Statistics figures, Mr Robertson writes - . . . Canberra’s effective funding of state budgets - at 4.9 per cent of GDP in 2006-07 - is as low as it has been in three decades. That is the situation across Australia, but the position for Western Australia is even worse. I previously advised the house that we would be looking at a reduction in our share of GST from 10.1 per cent of GST now to 7.5 per cent in 2010-11, losing at that point $1.4 billion from state finances as a result of Commonwealth Grants Commission punishment for our economic success. What has been concerning me is the growth in this phenomenon of the Grants Commission taking away our share of commonwealth grants as our economy outperforms those of other states. With my staff, I have been looking at what would happen over eight years if current circumstances continue. The result is frightening. After eight years of this pattern we would see our share of GST drop to 5.9 per cent of GST for 10.3 per cent of the Australian population. The total loss to state finances over those eight years would be $12.8 billion - $12.8 billion! - removed from our capacity to build the infrastructure to keep the economic growth going, which is supporting the nation’s export performance, which is supporting the federal budget. That is a matter that ought to be of great concern to all members of this house. It combines with another set of concerns that have been raised by JP Morgan’s chief economist, Stephen Walters, who reportedly sent a note to clients today stating that he believes the Reserve Bank will lift interest rates again next month. He then goes on to say what he thinks are the factors that will cause another interest rate rise, despite John Howard’s promise before the 2004 election. He says - Core inflation is still rising, owing to the tight labour market and lingering capacity constraints. Also, food prices are soaring, energy prices are high, and housing and utility prices are climbing. He then goes on to make a very important point, which takes me back to my infrastructure argument. He says - Real GDP growth has averaged 3.4% per annum - However, while real GDP growth has averaged 3.4% per annum - potential growth has been sliding, mainly owing to suboptimal productivity growth. Suboptimal productivity growth is preventing this country from realising its full potential. What helps drive productivity growth? Good infrastructure provision. What is hampering our ability to make that good infrastructure provision? The amount of $12.8 billion being taken out of our finances by the Commonwealth Grants Commission - punishing us for the huge economic success that is Western Australia and further punishment for the huge economic potential that awaits us in the future.
It combines with another set of concerns that have been raised by JP Morgan’s chief economist, Stephen Walters, who reportedly sent a note to clients today stating that he believes the Reserve Bank will lift interest rates again next month. He then goes on to say what he thinks are the factors that will cause another interest rate rise, despite John Howard’s promise before the 2004 election. He says - Core inflation is still rising, owing to the tight labour market and lingering capacity constraints. Also, food prices are soaring, energy prices are high, and housing and utility prices are climbing. He then goes on to make a very important point, which takes me back to my infrastructure argument. He says - Real GDP growth has averaged 3.4% per annum - However, while real GDP growth has averaged 3.4% per annum - potential growth has been sliding, mainly owing to suboptimal productivity growth. Suboptimal productivity growth is preventing this country from realising its full potential. What helps drive productivity growth? Good infrastructure provision. What is hampering our ability to make that good infrastructure provision? The amount of $12.8 billion being taken out of our finances by the Commonwealth Grants Commission - punishing us for the huge economic success that is Western Australia and further punishment for the huge economic potential that awaits us in the future.
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