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Wednesday, 22 August 2012
Page: 6079

Senator CAROL BROWN (TasmaniaDeputy Government Whip in the Senate) (13:29): I rise in today's matters of public interest debate to speak about an issue of vital importance to my home state of Tasmania, and that is the GST. Before I begin my contribution I would like to acknowledge the excellent contribution made earlier in the MPI debate by my Tasmanian colleague Senator Anne Urquhart. It was extremely well thought out and highlighted perfectly why an Abbott Liberal government would be disastrous for Tasmania.

The GST is vitally important to the states and territories. Since its inception in 2000, the revenue raised from the GST has been distributed to states and territories based on recommendations from the Commonwealth Grants Commission. In the 2011-12 financial year, around $50 billion in GST revenue was provided to the states. This revenue forms a huge part of state government budgets, particularly in my home state of Tasmania.

The distribution of the GST to the states and territories is based upon the principle of horizontal fiscal equalisation, HFE. That is the distribution method which underpins the concept of federalism in this country and spreads Australia's wealth fairly across all states and territories. The objective of the scheme is to improve equity for all Australian residents. It represents a fair go for all. It ensures that every state and territory has the physical capacity to provide their residents with the same standard level of service in areas such as education, health and public safety.

The federal Labor government has asked the Hon. Nick Greiner, the Hon. John Brumby and Mr Bruce Carter to undertake a review into the GST distribution arrangements. The panel has already provided interim reports in March and June this year, with the final report expected in October. Can I say from the outset that I am pleased that the federal Labor government, through Treasurer Swan, has already made a number of commitments to horizontal fiscal equalisation. This is in stark contrast to Mr Abbott and the Liberals, who have continually ducked the question and refused to guarantee the GST distribution using the HFE method, but I will touch on this a little later.

As I mentioned, the GST revenue is vitally important to Tasmania. The Tasmanian budget is heavily reliant on the GST revenue, with our share of that revenue and other Commonwealth government grants equating to 61.8 per cent of total revenue for the 2011-12 financial year, making service delivery in Tasmania more reliant on this revenue than in any other state. Tasmania has 2.1 per cent of Australia's national population and in the 2011-12 financial year received 3.6 per cent of the total GST revenue. This is because the HFE takes into account demographic and geographic factors which influence state costs. The ageing population of our state and the high proportion of people living in the lower socioeconomic bracket, coupled with our location, contribute to the higher costs for service delivery in Tasmania.

Whilst the Tasmanian government is currently facing a challenging budget period, this can largely be attributed to the huge write-down in GST proceeds because of the global financial crisis. In fact, since the GFC, Tasmania has lost more than $1.9 billion in GST and state owned revenue across the forward estimates. The loss of this revenue has had an enormous impact on the Tasmanian economy and presented us with a number of challenges. Indeed, like Tasmania, many other Australian economies are facing challenges beyond their control from things such as the high Australian dollar and skills shortages caused by the mining boom. But the Tasmanian government is meeting these challenges head on. We are seeing new opportunities for the Tasmanian economy in areas such as tourism, fine food and wine, and through renewable energy. We have much to be confident about with regard to the future of the Tasmanian economy.

In this period of the nation's two-speed economy it is not unreasonable for Tasmania to expect its fair share of the benefits. Spreading a modest share of the benefits of the economy amongst the states is something the Western Australian Premier, Mr Colin Barnett, has taken a particular dislike to, it seems. In recent months Mr Barnett has taken to the media to wage a war of words against Tasmania based on misinformation and political point-scoring. Mr Barnett has gone as far as to call Tasmania the 'begging bowl state' and to say that we have 'the nicest retirement village, inside Australia's biggest national park'. I and, I am sure, all Tasmanians take offence at Mr Barnett's cheap pot shots from a state that has been fortunate to be blessed with a greater share of the nation's natural resources and a larger population.

The first interim report of the GST distribution review debunked a number of the myths and self-interested arguments being peddled by Mr Barnett, including the main myth that Western Australian has been impoverished by its obligation to share its mineral riches with the rest of the Federation. Whilst many of Mr Barnett's fanciful comments have been debunked by the review panel's interim report, he continues to advocate for GST distribution to be based on a per capita basis—something that would have a debilitating impact on Tasmania. But Mr Barnett is not the only Liberal politician making comments about the GST distribution review. The comments made by the Leader of the Opposition, Mr Abbott, the shadow Treasurer, Mr Hockey, and the Leader of the Opposition in the Senate and fellow Tasmanian, Senator Abetz, should be of great concern to all Tasmanians.

Let us examine the devastating impacts a per capita distribution method for GST revenue would have on the Tasmanian budget. Moving to per capita distribution would see a loss of over $600 million from the Tasmanian budget. That is right: under the per capita distribution method, Tasmania would see over $600 million ripped out of the state. This would be equivalent to the loss of 800 doctors, 3,000 nurses, 500 allied health professionals and over 100 child protection staff. Under an Abbott-led government, this is where we would be heading. Let me be clear: Mr Abbott and the Liberal Party are no friends of Tasmania. They want to do away with the HFE and absolutely gut the Tasmanian budget. The continuation of the HFE scheme is vital for Tasmania. Mr Abbott does not support this commitment to fairness. Instead, he has thrown his weight behind Liberal state governments calling for the HFE to be abandoned in favour of per capita distribution.

An Abbott-led government would be financially disastrous for Tasmania. As I mentioned earlier, the state government is predicting that the state's revenue could be reduced by 14.4 per cent, or $663 million. It is clear that a significant adjustment of the HFE would be devastating to Tasmania.

In a letter sent to the Premier of Tasmania, Lara Giddings, Mr Abbott failed to support and commit to HFE. This is in line with other comments he has previously made refusing to back HFE and the natural fairness which underpins the Federation. But it is not just Mr Abbott who is throwing his weight behind the push for per capita GST distribution. Shadow minister Mr Joe Hockey has lent his support to Mr Barnett's per capita campaign. On ABC radio last month, Mr Hockey supported Mr Barnett's push to change the GST carve-up, saying it was 'very reasonable'. Mr Hockey said that Western Australia's financial performance was strong and that the state's leader and phenomenal advocate, Mr Colin Barnett, faced massive pressure to roll out much needed infrastructure. These comments by Mr Hockey are extremely concerning for all Tasmanians and back up the position taken by Mr Abbott.

One may ask what Tasmania's senators are saying about Mr Abbott's and Mr Barnett's push to challenge the way the GST is distributed. One might expect that, as senators for Tasmania, they would stick up for Tasmania and advocate for its best interests in committing to a HFE. But we are hearing deafening silence from the Tasmanian Liberal senators in this place. In particular the most senior Tasmanian senator and Leader of the Opposition in the Senate, Senator Eric Abetz, has failed to stand up to Mr Abbott and advocate in Tasmania's best interest. The comments made by Senator Abetz are highly worrying, as is the silence of the Tasmanian Liberal opposition leader, Mr Will Hodgman.

The Federal Labor member for Franklin, Minister Julie Collins, wrote to Senator Abetz on 9 July seeking assurances that a Liberal government will commit to a HFE but is still waiting for a response. When asked on ABC radio recently about the issue of GST distribution, Senator Abetz again failed to endorse HFE. I want to quote some of the interview because it is particularly telling. The host says:

I'm interested in what you said then. At no point did you say that Tasmania's GST share would stay the same. You suggested that there might be a change in that but that there might be other ways of handed out subsidy that helps Tasmania along.

Senator Abetz replied:

Tasmania, overall, will always, and has always got an exceptionally good funding deal from Federal Liberal Governments … the Tasmanian Liberal Senate team will fight to ensure that Tasmania gets the best possible deal—and the grants commission in the past has ensured that Tasmania gets a fair deal and I believe that that will continue to be the case, but what may well occur is that there be more of a rejig between some of the bigger states.

The host continued:

So that Tasmania would get fewer dollars from the GST pool.

Senator Abetz then said:

No, no. Not saying that at all.

The host replied:

That's exactly what you just said isn't it? That Tasmania would get fewer dollars from the GST pool.

This interview with Senator Abetz, and the comments made by Mr Abbott and Mr Hockey, should give all Tasmanians a feeling of unease. They are supporting Mr Barnett's position: now that Western Australia is reaping the benefits of the resources boom, they have decided they do not want other Australians to share in this prosperity. Might I remind Premier Barnett that it was not long ago that Western Australia was a beneficiary of the scheme. That is right: it was only back in 2006-07 that Western Australia was a net beneficiary of horizontal fiscal equalisation. As Premier Giddings so eloquently put it, 'Short-sighted adjustments to the formula now could come back to bite it in the future.'

It has also been disappointing to hear the Independent member from Tasmania, Mr Andrew Wilkie, backing Western Australia's claims for more GST revenue. On a visit to Western Australia earlier in the year Mr Wilkie threw his support behind WA's push for a bigger share of the GST. Mr Wilkie said he was convinced that WA was being treated unfairly when discussing GST distribution. He went on to say:

I do intend, when the opportunity arises, to champion the need for WA to be treated more fairly in that regard.

These comments can only be viewed as very disappointing, particularly from a Tasmanian member of parliament. He should be well aware of the high stakes at play regarding the carve-up of GST revenue. It is clear that the current HFE system has never inhibited economic development in resource-rich states nor has it acted as a barrier to the mobility of labour and capital.

The HFE must continue because it is good for all Australians. Mr Abbott does not support the interest of Tasmanians or the Australian principle of a fair go for each and every one of us. Mr Abbott and the Liberal Party would write off Tasmania in the hope of a few more seats in Western Australia. He would gut our economy for a few more mates on the mainland. He is no friend of Tasmania. The continuation of the HFE scheme is vital for Tasmania. Earlier this year, all of my Tasmanian federal Labor colleagues represented this view to federal Treasurer Wayne Swan and I am pleased that the federal Labor government has made a commitment to HFE.

The Tasmanian state government has also made a number of submissions to the GST distribution review which demonstrate not only the value of the HFE scheme to Tasmania but to Australia. I offer my strongest support for these submissions. These submissions argue that the current HFE scheme is appropriately responsive to changing state circumstances, including the impact of global economic changes, and demonstrate that the continuation of the current HFE scheme is essential—particularly in the current economic environment.

This issue could define the future of our state, so I strongly add my voice to the decision the federal government has made to reaffirm its commitment to the HFE scheme. It is clear that economic equity across Australia is essential for a prosperous Australia. Economic equality is considered to have a major influence on the health, education and life outcome of any population and it is at the heart of what we value as Australians: fairness for all.