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Wednesday, 31 August 2016
Page: 204


Senator BACK (Western Australia) (13:15): I have a story to tell you in the chamber today. It is about a family called Australia, and the members of that family are the people of the states and territories of Australia, throughout this landmass. And the glue that should be holding that family together is called the Australian Federation. I am here to tell you that it is flawed and that it is in danger of fracturing. I speak, of course, of the goods and services tax distribution to each of the states and territories of this nation.

We have now achieved a situation—I am sure never intended by the parliament, the Prime Minister, or the Treasurer of the time—in which the relativity, based on population, of the return of GST to each of the states and territories is at a ludicrous level of imbalance. It would be laughable if it was not so serious. On the basis of per capita return for GST on the basis of population, Territorians are receiving 530c per dollar—that is, $13,200 for each person. Tasmanians—you would be interested on the other side—are receiving $4,444 per capita. That is, 178c per dollar invested. South Australians are receiving a bit less—$3,950 per head at 140c. Queenslanders—and it is going down—are receiving $2,900. They are getting $1.20. The ACT, through you, Madam Acting Deputy President, to Senator Seselja, is receiving $2,890. That is 115c. The Victorians and the New South Welshmen are faring a bit worse at $2,278-65, just under the 1 to 1.9. Contrasting the $13,205 for Territorians, for Western Australians the per capita is $760—a mere six per cent of the per capita share of Territorians. It is 30c in the dollar. It cannot be sustained. It cannot be handled into the future. I am here to tell you about the impact it is having on my home state of Western Australia. I am also here to tell you, incidentally, that Western Australian senators and members are sick to death of it. I am very pleased that my colleague Senator Dean Smith is here because he remains, and has been, a champion in trying to put this point before the parliament.

In addition to the inequity that Western Australians face, I should point out to you, although it is not central to the argument, that Western Australian contributions to company taxes in this nation are disproportionately high. The two largest taxpayers in the nation are Rio Tinto and BHP Billiton. Income taxes per capita contribute more. We are fortunate in the sense that the reliance on welfare on a per capita basis is less. But what is the impact of this in 2016-17? It could not be more starkly outlined than by looking at either the budget surplus or the deficit of each of the states of Australia. It is obvious why, in many cases, the surplus that I am about to describe to you is underwritten by borrowed money from Western Australians trying to pay their GST share when we are receiving 30c.

With Tasmania—my colleagues, again, on the other side will be interested to know—the prediction this year from the Treasurer was a $77 million surplus; for South Australia, a $254 million surplus; for Queensland, an $867 million surplus; for Victoria, just under a $3 billion surplus; for New South Wales, a $3.7 surplus. These contrast with a deficit in 2016 in WA of $3.9 billion. You might say, 'Well, that's poor economic management.' When I say to you that the share that Western Australians have forsaken to assist with the surpluses I have just mentioned is $4.7 billion against what is actually a deficit of $3.9 billion, it more than wipes out the budget deficit. Also, it would have put Western Australia into surplus.

How did this come about? Before expanding on that, I just want to make one point, if I can, because so often it is put to us in Western Australia: 'Well, you were a recipient state for so many years; now you're just redressing the balance.' Let me make the point very, very carefully to you, and to those who might be listening: yes, Western Australia was a recipient state for many years. Why was it? It was not because of a subsidy or a handout of the kind we are seeing at the moment; it was compensation for the fact that, at that time, there were very high tariffs on manufacturing, particularly in your home state of New South Wales, Madam Acting Deputy President O'Neill, and in Victoria. The compensation to WA and, to some extent, to South Australia, also, was compensation for the fact that our states were not manufacturing states and, therefore, were not receiving high-tariff protection. Therefore, the recipient status was as a result, largely, of compensation for that fact.

So where do we go to try and resolve these issues? We have the Commonwealth Grants Commission. It was, in fact, in a Senate inquiry headed by then Senator Trood—in which I remember participating, and I think Senator Claire Moore may have been the deputy chair—where we made the point that, of the formula used by the Commonwealth Grants Commission, there was not a clause in the formula that speaks of the capacity of a state or territory to earn revenue and achieve it, or to contain expenditure and ensure it. So, therefore, where is the incentive for a state or territory to actually achieve parity, or as close as they can to it? Having been in Tasmania in business and having resided there, I accept the fact that it is unlikely, for example, that Tasmania is going to achieve that status. But there is nothing to stop Tasmania actively trying to maximise its revenue. I congratulate the Hodgman government for their efforts to do so and indeed for achieving their budget surplus.

But, as I look back at the industries with which I was closely associated in the 1990s, up to 2000, in Tasmania, most of them now either are not there or are severely depressed—the forestry industry, for example. The other ones that I thought were of tremendous potential value and benefit were industries like oil and gas. It is a very, very rich state—its land and its waters. But the decision of the time was to not explore those options. Woodchips, obviously, were not acceptable to the Tasmanian government. Hydro Tasmania was a very, very proud organisation until the government of the day decided to fleece it, and we see where it is today.

Only in the last few hours have I learnt, to my immense annoyance, that the new Northern Territory government have decided to put a moratorium on LNG exploration and extraction, as indeed yesterday did the Victorian government. So is that another circumstance in which the rest of Australia now is going to put its hand in its pocket even deeper? We learn that the Northern Territory apparently need their $13,000 per head because of the large Aboriginal community in the Territory. Haven't we got a large Aboriginal community in Western Australia? Have we not had immense costs associated with developing and maintaining the North of Australia, largely to provide royalties income back to the Commonwealth of Australia?

Only the other night did Senator Reynolds and I have the privilege of attending Rio Tinto's 50th anniversary of the export of their first-ever shipment of iron ore, in August 1966. Let me tell you a little bit about the excellence of that company. At a time when the Pilbara would have had nothing other than bush tracks, in the space of 18 months—and remember we cannot get legislation through this place in three years—in virgin bush, they built the towns of Tom Price and Pannawonica, they built the mines, they built the railroad to the coast, they built the port and they exported the first-ever tonnage. That is the sort of vision that we see out of Western Australia.

But until the Grants Commission process is changed, until states and territories have a strong incentive to actually earn revenue and to contain expenditure, we will not see a change. Yes, Western Australia's share will go up. No state should ever go down to 30c in the dollar. The impact it has had, not just on our state and our citizens but nationally, has been and will continue to be catastrophic. The Prime Minister announced the other night that, as our share goes up, there should be an inclining floor so that we get to the stage that no state ever is in the circumstance of getting 30c in the dollar. We recognise that in a Federation there must be support for all states and territories. I am here to tell you that it is fractured at this time. Western Australia is unfairly dealt with, and the Federation is at risk.