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Monday, 14 March 2005
Page: 126


Senator BARNETT (10:17 PM) —I stand tonight to urge the Tasmanian government to use the current and next financial year’s $196 million GST revenue windfall to boost health spending, to cut taxes or to do both and to stand accountable for their action or inaction. I urge the state government to heed the recent warnings of the federal Treasurer, Peter Costello, to be more accountable for the rivers of gold flowing their way in the form of GST revenue. As former Prime Minister Paul Keating once said, never stand between a premier and a bucket of money. This is a rare occasion when I wholeheartedly agree with the sentiments of the former Prime Minister.

Since the GST was introduced in 2000, GST revenue to the states has increased by almost $11 billion to $35.2 billion this financial year. By 2007-08, projected GST revenue payable to the states will have reached $41.3 billion. That is an almost doubling of the revenue, and it all goes to the states—every cent of it. We well remember the Labor states kicking and screaming in the 1998 federal election, when they played politics with the GST and opposed it outright in the vain hope of getting Kim Beazley elected Prime Minister, despite the vague Beazley plan to roll back parts of the GST and therefore threaten revenue to the states. These same states are now modern day Scrooge McDucks, with their Treasury coffers bulging like giant money bins equipped with a diving board so the state premiers can indulge their overt tendency to hoard money for their own edification or, in Tasmania’s case, for the forthcoming state election. Yet each one of them would solemnly declare that the GST was like demon drink afflicting their fiscal morality, such is their hypocrisy.

This steep increase in GST funding has included a windfall that, between 2004 and 2008, will total almost $10 billion. That is almost $10 billion the states and territories will receive over and above what they would have received if Labor’s old, pre-GST tax system had remained in place beyond 2000. This revenue allegedly forms the basis for Labor’s mantra that the Howard government is the ‘greatest taxing government in history’. But the great lie of that allegation is that it fails to acknowledge that every cent of GST money is paid in buckets to the states for spending on hospitals, police, education et cetera and in return for the abolition of a range of state taxes, which was agreed to by the states in 1999. When the GST was introduced in 2000, the agreement involved the states abolishing a range of indirect taxes, such as stamp duty on mortgages, leases and commercial conveyances. The states and territories signed up to it. They agreed, so I guess that by 1999, and after the GST election the year before, they had finally got the wink from their respective Treasury chiefs that they were onto a winner with GST revenue and it was now okay to put their hands out. The $10 billion windfall since 2003-04 is there to enable the states and territories to honour that pledge to abolish those indirect taxes.

This whole saga represents the big difference between Labor and the coalition. Under Treasurer Peter Costello, over the next four years the states will get almost $10 billion more than they would have got from a Beazley Labor government to spend on essential service providers such as police, teachers and nurses and to cut taxes. If these state taxes were abolished tomorrow or over the next four years, it would cost approximately $15 billion, but the states have a windfall approaching $10 billion, including almost $2 billion in 2004-05. Better still, they are onto a booming growth tax. There is every chance that the revenue figures I am using today will be out of date and superseded by bigger numbers before the year is out or soon after that. The states now have the capacity to abolish two-thirds of those taxes, and in the interests of consumers and small business they ought to honour the agreement and get on with the abolition and phase them out.

In the case of Tasmania, which traditionally has suffered unemployment rates higher than those in other states, the GST windfall could be used to start phasing out payroll tax, that great road block to job creation in Tasmania. As the saying goes, death and taxes are inevitable in this life, but for the life of me I cannot think of a more iniquitous, anticommunity and antijobs tax than payroll tax. Payroll tax applies in all states. While there are exemptions for small business, Tasmania lags behind the other states in this regard. The impact of this tax is greater in Tasmania because we do not enjoy the sheer volume or diversity of commerce enjoyed in other states.

Over the past two financial years payroll tax collections in Tasmania initially jumped by 11 per cent, from $157 million to a forecast last year of $173 million for 2004-05. However, the state government’s mid-term budget report dated last December revised the payroll tax revenue forecast to $185 million, which means the increase over the past two years has now been almost 18 per cent. This is an obscene case of taxing employment. If the Tasmanian government is balking at cutting other taxes it could at least make a start on payroll tax. If the state government is simply going to keep its greedy fingers in the back pockets of Tasmanian taxpayers in order to hoard more booty for an election war chest then it is plainly double dipping: grabbing more cash from Tasmanian battlers than is needed when almost two-thirds of its entire income comes from the Australian government.

I note that the Labor states and the federal opposition regard Mr Costello as another Sheriff of Nottingham on the tax front but I say to the Labor Party: how can this be so when all the money is going back to the states at the rate of $35 billion this financial year, which is $2 billion a year more than what the states would have got under Labor?

In Tasmania, the Lennon state government is presiding over a health system in crisis, which puzzles many people when the government has so much money, including—I am reliably informed by my state Liberal colleagues—a state election war chest already approaching $400 million. No wonder, given the GST. Since the year 2000, total GST revenue to the Tasmanian government has increased from $988.1 million to $1.435 billion, or an increase of 45 per cent. The state started receiving more GST payments than it would have under the old system by 2003-04—although if you read the Tasmanian budget papers it actually claims the state is still getting less than what it received under the old tax system, which is either an untruth or an incompetent oversight. The state government has had two budgets in which to insert the correct information but they have conveniently overlooked it, so I approach their recent budget assertions with a degree of scepticism.

Between 2003-04 and 2007-08 the projected GST windfall to the Tasmanian government will reach $507.2 million more than total payments under Labor’s old tax system. Last financial year, this windfall totalled $69.5 million and in the current financial year it is $101 million. By 2007-08 it will reach $128.5 million a year, and that figure will keep growing because GST revenue growth mirrors the buoyant economy. It is a growth tax. As the economy grows, it grows, and so Australian living standards grow with it. The GST is actually our way of ensuring that battlers too can share in the gains of the nation but, in its utter confusion over fiscal policy, Labor will not have it.

The Tasmanian Labor government even claims that the GST is really its own money being rightfully returned to it. What rot. I point out to the Tasmanian government that it is being paid the highest per capita GST revenue of any state. In the last Commonwealth Grants Commission review, the Tasmanian government’s relative share on an equal per capita basis is put at 1.55 while New South Wale’s share is only 0.86 per capita, Victoria’s share is 0.87, Queensland’s share is 1.04, and South Australia’s share is 1.20. No wonder they envy Tasmania when our per capita share is the equivalent of $1.55 while the two bigger states are left with an equivalent payment of less than 90c. Even last week the Premier of New South Wales, Bob Carr, was complaining about the arrangements. Only the Northern Territory is receiving more GST funding per capita than Tasmania.

Look at it from another direction. If Tasmania’s share of GST revenue were based purely on population numbers it would be in the order of 2.35 per cent. But to ensure the Tasmanian government can provide the same level of services as other states the Tasmanian government’s population share is weighted at 3.67 per cent of the GST cake.

The states should be made accountable for what they do with GST funding. That is the short and simple of it. I personally support regular benchmarking and key performance indicators for the states in their financial performance with discretionary expenditure. For instance, I believe the Tasmanian government should be subject to benchmarks in the field of health delivery in particular. It simply does not add up that the Tasmanian government is awash with GST windfall funds and yet we keep learning more about the health crisis, including inaction on mental health and disability services. Congratulations to the opposition health spokesman, Sue Napier, for making this point patently clear to the Tasmanian public. (Time expired)