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Thursday, 1 March 2012
Page: 1458


Senator BACK (Western Australia) (18:24): I rise to express concern that the whole Federation relationship is, I believe, at risk if we continue to see inequality in the allocation of funds to the states and territories. I had the pleasure last year of being a member of the Senate Select Committee on Reform of the Australian Federation, under the chairmanship of then Senator Trood. This question came up very clearly in the inquiry. In fact, a recommendation was made which I would like to refer to because I think it goes to the fundamental fault in the GST distribution as it occurs at the moment.

It is not so much that different states and territories have different capacities to earn revenue; it is about whether or not the different states and territories are actually trying to maximise and capitalise on their capacity to earn revenue. I liken it to a family in which all of those capable of earning should be earning and contributing. If there are those within the family who do not have the capacity, for whatever reason, to contribute as much, they ought to be supported. But in that analogy, if one of them decides they are going to live on the Gold Coast and surf and contribute nothing to the wellbeing or the wealth of that family, they have no right to expect equitable distribution.

I fear that is what we are seeing. Western Australia is now looking at receiving about 50c in the dollar back for the GST it contributes—and this could even go down, we think, to less than 30c in the dollar. That is totally unacceptable in a federation. It is unacceptable when there are states and territories which are not trying to maximise or optimise their revenue-earning capacity. And why would they? We have a scheme at the moment which says that, because of equalisation, there should be an expectation across Australia that all the citizens should have an equivalence of services and products—and we agree with that. But that should be contingent upon each of the states and territories actually contributing their maximum. For example, Queensland this year will get somewhere close to 99c in the dollar, when it may have been 92c or 93c in the past. We can understand that. Despite all the nonsense we heard in question time this afternoon, everyone around Australia would say it is reasonable that, as a result of the natural disasters which have befallen Queensland, we should see a distribution increase in their direction.

Queensland is one state which does put its shoulder to the wheel. I dare say, however, that there are others which do not—despite having the capacity to do so. Premier Barnett, from Western Australia, made the observation recently that the federal government is now becoming a quite minor contributor to the economy and management of the state of Western Australia. Western Australia is orienting itself much more towards Asia, while the eastern states of Australia are still oriented towards the Pacific region and to the east. We do not want that circumstance.

To use the same veterinary analogy I used in my first speech in this place: if you stop putting food into the cash cow at one end, what you value coming out of the cash cow at the other end will inevitably dry up. We are starting to see that now in Western Australia. Yes, at the moment we are a state which has the capacity to contribute, and which is contributing, significantly beyond what we have in the past and what other states are capable of contributing. And we are proud of that. If, however, you do not feed the cash cow, if you do not put the funds into infrastructure development, you will inevitably see the cash cow start to dry up.

When I make this point, economists and others from Victoria and New South Wales often remind me, 'You were recipients for so many years.' Yes, we were. But I make two points. The first is that we were always trying as a state to maximise our revenue capacity—I think back to the days when iron ore exports out of the state were held back for so long. There is a second point I make, one which the economists from Victoria and New South Wales never seem to want to engage with me on. I ask them, 'What about all the tariff protection for manufacturing which went on in those states in those years they were supposedly supporting our state?' The economists do not ever seem to want to engage with me on that. I say that we need far more equity, we need far more fairness and we need far more rationality in the whole question of the GST distribution. If not, Western Australia will not secede; the rest of Australia will secede us. I do not want to see that happen.