A Fair Share of GST
House of Representatives, Treasury Laws Amendment (Making sure every State and Territory gets their Fair Share of GST)
Watch Matt's Speech here
Mr KEOGH (Burt) (17:48): Well, it's the day we may never have thought would arrive. Indeed, it's a day that I've previously said was almost politically impossible, and the solution before us today vindicates that position. I have been listening to the government speakers debating this bill, the Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Bill 2018. I have personally led the debate on bringing about this GST fix for Western Australia. After years of pleading with the government, finally they have seen sense. Finally they have agreed to Labor's proposal that the GST for WA and across the country be fixed, to be made fair, and that, in doing so, no state would be worse off—the element that makes political impossibility instead a reality. What a ride we've had to get here. This is the 23rd time I've stood in this place talking about a fair share of the GST for Western Australia—the 23rd time!—and I've been in this place only since the middle of 2016.
WA need our fair share of GST and we need it now. We've been disproportionately propping up the rest of the nation for too long, and it's left our state worse off. WA has a legitimate complaint. It should never be forgotten just how much WA was financially crippled by joining the federation in the first place. Indeed, it was precisely because of this that horizontal fiscal equalisation was born and formalised through the Commonwealth Grants Commission back in the 1930s, following such fiscal difficulties pushing WA to try to leave the federation. Never in the history of the GST forming the basis for funding for HFE has any other state or territory fallen below a relativity of 86c, yet we in WA copped 30c in 2015-16 and 2016-17. Even now, it has only crept up to 34c.
Labor has been leading the charge to get a fair share of GST for WA from the very beginning, calling for changes to the unfair system. Labor announced our legislated Fair Share for WA Fund at the end of August 2017, recognising the issues that Western Australia has experienced. We committed at the time $1.6 billion, to be paid for with our measures to improve the budget bottom line, which would have put WA up to a 70c level. At the time, the then Treasurer, now the Prime Minister, criticised us for this top-up method, calling it a mug's game. That was despite Labor's proposal giving certainty in the medium term, compared to the government's prior approach of piecemeal, ad hoc, last-minute top-ups that caused as much fiscal harm as they did good. So it wasn't long before the government announced its own package of funding for Western Australia. Now it appears the Liberals have agreed to our position on the GST carve-up—that is, we introduce an initial floor of 70c in the dollar for WA, then for all states from 2022, and then a 75c floor from 2024.
You can't trust this government on the empty promises that they make, whether it's to maintain funding for schools and hospitals, to save the ABC, to have stable government, or to keep the same Prime Minister—or, dare I say, even the same Deputy Prime Minister. So you can understand our apprehension at agreeing to an unlegislated GST floor. Bill Shorten's and Labor's position was to make the floor the law. The now Prime Minister told us in July that we didn't need to legislate a floor, that it was unnecessary; yet on our side of the House we persisted. Then, once he'd ascended his throne, the Prime Minister agreed to do it.
Similarly, despite the government saying that no state would be worse off under their plan, they said that they didn't need to legislate that either. We know that the people of Australia need certainty in this era of empty promises and thought bubbles from the Abbott-Turnbull-Morrison government. The state and territory treasurers need that certainty too. We needed the assurance that no state or territory would be worse off written into law. After all, not just does Labor understand the plight of Western Australia; we understand the reliance of Tasmania, the Northern Territory and others on GST to support their state and territory budgets too.
The Prime Minister got himself tied in knots a few weeks ago spruiking his GST plan ahead of the meeting of state and territory treasurers, saying it was good to go and no further assurances needed to be made. It takes a special kind of person to bring together all sides of politics from all states and territories. This Prime Minister and his Treasurer managed to do that—but it was against them. That is not to mention the prospect of the government's Tasmanian senators crossing the floor against them. Not one state or territory treasurer agreed to the GST carve-up without an assurance that no state or territory would be worse off. Even the Treasurer of the great state of Western Australia, Ben Wyatt, faced with the toughest of budgetary circumstances, supported the other states, knowing that no other state should have to suffer what WA had.
And oh boy hasn't the Prime Minister undertaken the most spectacular backflip of them all in the last week? When Labor said the commitment to ensure no state would be worse off should be enshrined in law, the Liberal Party scoffed at us. Last week, they agreed to do just that until 2026. Seriously, given the short-term tenure of Liberal Prime Ministers, this one might have a future in gymnastics, because in just the last 12 months the Treasurer turned Prime Minister has held nearly every conceivable position possible on the GST. The 2020 Tokyo Olympics are not that far away, Prime Minister! Meanwhile, Labor has consistently stood for a fair go for WA and for all Australians on the GST.
So what have we got before us today? This bill seeks to legislate the government's response to the Productivity Commission's report on horizontal fiscal equalisation—a response that was delayed for months. In fact, it doesn't really enact the Productivity Commission's recommendations at all. It makes you wonder why we had to wait, really. The bill will make changes to the model for equalisation to avoid abnormal variations by pegging it to the higher of New South Wales or Victoria, which have historically been the consistently better-performing states. This change will occur over a transition period, involving additional funds from the Commonwealth to ensure that Western Australia receives at least a 70c floor from 2021—indeed, through unlegislated grants from 2019—and a 75c floor from 2024, as well as to ensure no shortfalls in funding to other states and territories.
This bill also seeks to legislate a 'no state or territory will be worse off guarantee' during the period of full transition from 2021-22 through to 2026-27. This guarantee will mean that, over the course of the transition period, states will be topped up to ensure they receive the better of the old or new equalisation model over the transition period. This has been accepted by state and territory treasurers. While this is reasonable, we are not totally unconcerned about this. The guarantee only sustains for that transition period. What happens after that?
As I mentioned before, it appears that it is only Labor that really understands or cares for all states and territories in the Commonwealth, and in particular their own plight if they receive less GST revenues. Western Australians know the struggle and don't want to see any other state or territory face the same fate. That is why, unlike those opposite, our Labor Party has worked so well together across all states and territories on a GST solution. Our leader, Bill Shorten, and our shadow Treasurer, Chris Bowen, should be acknowledged for their leadership and constant consultation on this issue. The other states and territories can only hope for a Labor government to be in office at that point at the end of the transition to ensure financial security beyond the point of transition.
Then there is the issue of other Commonwealth payments. It is one thing for the government to say that it will put more money into the GST pool, but what then happens to the other funding for the states, such as for schools, hospitals, roads and other infrastructure? I am pleased that the new Treasurer has written to his state and territory counterparts in this letter to confirm that the additional financial assistance in this legislation will not be offset or partially offset by the decrease in other grant funding to the states. Finally, this bill legislates for a Productivity Commission inquiry at the end of the transition period to make sure everything is working as it should—efficiently, effectively and as intended.
Contrary to the wilfully misleading advertisements run by Senators Cormann, Cash, Reynolds and others, Labor will support this bill in the House and in the Senate. We need to get the GST fixed for WA and across the rest of the country. We need to fix this as soon as possible, because WA is currently being left behind. In fact, if the government had come on board last year when Labor made its commitment to a 70c floor and delivered a solution in its 2018 budget, WA would already be more than $3 billion better off. That $3 billion would have gone a long way in fixing the financial disaster left by the previous state Liberal government.
We must not forget the role of the member for Pearce in wrecking that WA state budget. In early 2011, the member for Pearce was the WA state Treasurer. As Treasurer, he prepared the state budget on the basis of a higher than allocated rate of GST distribution. When called out for this by Labor and the media, he said that the rate of GST for WA was so low that the federal government would just have to change it. Well, since coming to this place and into government in 2013—five years ago—what has the member for Pearce done on GST for WA?
Mr Hart: Nothing.
Mr KEOGH: Nothing. All the member for Pearce has done is bake in WA state budget deficits for nearly a decade, and this is the guy touted to be the next Liberal federal Treasurer. Well, geez. God help us. Bringing us back to the present, if the GST had been fixed by the government in its last budget, WA would have been more than $3 billion better off. That would have paid for the Perth Stadium twice over. It would mean that, thanks to the strict budget management of the McGowan WA Labor government, the WA state budget could, instead, be in surplus already. But the GST should not be a political issue between us. This is not something the leader of the Senate should be writing to me about, pleading with me to agree with. It would be funny if it weren't farcical.
My WA Labor colleagues and I all received letters from the Leader of the Government in the Senate, the Minister for Finance, as a fellow Western Australian, imploring us to support his, the Treasurer's and the now Prime Minister's changes to the GST distribution. If you told me a little while ago that I would receive a letter from one of the most senior Liberal ministers in the country, asking me to support what was already Labor policy, I would have laughed at you, yet that's exactly what we all received. Western Australian Liberals have ignored WA too long. They've taken WA for granted for too long, and they have not been fighting for a fair go for WA. Now that they've realised that WA exists, they are in damage control trying to fix it. Well, I'm glad that the WA Liberals have finally joined Team WA, even if it is only for their own politically expedient reasons. We don't need to go to the next election with the GST issue still hanging over our heads. This issue needs to be fixed and will be fixed for all Western Australians as soon as possible. This GST legislation is a start in getting a fair go for WA and a fair go for all Australians. I proudly commend this bill to the House.