Senate debates

Tuesday, 27 February 2007


Commonwealth Grants Commission

6:51 pm

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party) Share this | | Hansard source

I move:

That the Senate take note of the document.

The Report on state revenue sharing relativities: 2007 update was tabled today. It is a very interesting document that I commend to all senators to have a look at. The commission is required to base the recommendations on relativities on the five years from 2001-02 to 2005-06. Over those years, relative fiscal circumstances of the states have changed quite substantially.

This year Western Australia joins New South Wales, the state with the strongest fiscal capacity, and Victoria in warranting less than an average per capita amount from the pool of GST revenue and healthcare grants for 2007-08. Queensland, my own home state, will also need less than in the past, requiring only slightly more than average. Compared to last year a smaller part of the pool is needed to equalise the fiscal capacities of these states. Perhaps I should have started with this—the Commonwealth pays money to the states under financial assistance grants and GST grants and this report looks at the relativities on which the Commonwealth Grants Commission actually divides up the total Commonwealth moneys between all of the states.

Over the five years, the commission’s calculations have tracked a larger change in relative fiscal capacities of the states than that observed in last year’s update. Those changes were due to changes in state revenues, and most notable of these has been the unprecedented strengthening of the fiscal capacity of Western Australia and, to a lesser extent, my home state of Queensland. It is interesting to read from this report that the features of this particular update include the conveyancing revenue base of Western Australia, which grew rapidly in 2005-06, greatly increasing its relative fiscal capacity in that year.

In my home state of Queensland, coal royalties increased markedly in 2005-06, strengthening Queensland’s revenue capacity. This was supplemented by an ongoing strong conveyancing base in Queensland. However, changing social and demographic conditions moderate that revenue effect by increasing the cost of delivering the average level of services in those states. If you get above one in the relativities in the tables in this report, that means that you are a contributor state. If you are below one, you get a greater share of the average payments. Relativities use the average of all states as the benchmark. States with relativities above one, as I have mentioned, require more than the Australian average per capita amount from the pool to deliver services at average levels. Those below one require less than the Australian average per capita amount.

All states but New South Wales, Victoria and Western Australia will receive more than the Australian average per capita amount in 2007-08. The commission observed that rapid growth in Queensland and Western Australia’s revenue raising capacities had increased their relative fiscal capacities. This is a very interesting book. It does warrant very close attention by all senators. I want to mention that, on several pages throughout this report, reference is made to the coal revenues from Queensland. Because coal is such a substantial part of the revenue of Queensland, it is quite amazing to me that the Labor Party are trying to knock off the coal industry. Certainly, the Greens want to get rid of it completely, which would be disastrous for my state of Queensland. The Labor Party are messing around with all sorts of strange ideas when it comes to the coal industry. They are now looking at clean coal techniques and suggesting that moneys should be paid, just catching up on what the coalition government has already been promising. I seek leave to continue my remarks later.

Leave granted; debate adjourned.