Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

I want to talk about a publication by the Menzies Research Centre called State of the states. It tells of a fairly dramatic situation about the state governments and also makes quite remarkable reference to the amount of money the states have received post GST and what they have done with it. I can see that Senator Moore is on the edge of her seat waiting for this information. In 2005-06 the states and territories collected $47.4 billion more revenue than they did in 1999-2000—the last year of the pre-GST era—and the figures are quite remarkable. In New South Wales, the percentage increase has been 38 per cent and, in my home state of Victoria, there has been a 43 per cent increase, some $9.665 billion extra per annum than they received in 1999-2000. I will quote from the report. It says:

To put this into perspective, the revenue windfall that State and Territory governments received in 2005-06 was equivalent to five percent of the value of Australia’s Gross Domestic Product in that year. It exceeded the total revenue received by the New South Wales Government in 2005-06.

GST revenues account for most of the revenue windfall. Current grants and subsidies, which include GST revenue, have been steadily rising and in 2005-06 accounted for almost half of total State and Territory government revenues.

…            …            …

In 2005-06 States and Territories collected $6.4 billion more in state taxes, $3.5 billion more in sales of goods and services and $2.6 billion more in interest income, than they did in 1999-00 in nominal terms.

That is the increase in the revenue, but what we need to look at is where that expenditure has gone. The real issue here is that, despite these quite dramatically increased revenues, you need to look at the expenditure, the wisdom of that expenditure and where it has gone. A large proportion of the increased revenue expended has been in the government sector, as you would expect, and the great bulk of that expenditure has been in increased employee costs. Some $14 billion of that increased revenue was in increased salaries, and some $5 billion was in extra government employees.

The issue here is not whether government employees have received a pay rise; their pay rises are about equivalent to those in the private sector. I quote from the report again:

... average weekly earnings among private sector full time workers in each State and Territory grew by at least 29 percent (up to a maximum of 39 percent in the ACT).

…            …            …

In comparison, average weekly earnings among public sector full time workers in each State and Territory grew by at least 28 percent (up to a maximum of 34 percent in the ACT) over the same period.

In the case of those private sector average weekly earnings increases, you can be confident—and the report refers to this—that they reflect the growth in labour productivity for the simple reason that, if that were not the case, you would expect, as the report says, profits to be squeezed or a steady increase in the general level of prices as measured by the CPI, and we did not see either of those situations.

I quote again from the report. It says:

... in the case of the public sector, though output per employee is difficult to measure, what measures there are generally do not suggest that productivity is increasing at anywhere near the rates that are being achieved by the private sector. This is despite the fact that growth in average weekly earnings among public sector full time workers has broadly kept pace with the private sector.

I will continue the quote:

On balance, the increased remuneration per public sector employee observed in recent years appears less related to the achievement of productivity improvements in government service provision than to difficulties faced by State and Territory governments in containing wage pressures.

As the report says, you would expect that education, health and public order and safety receive the greatest bulk of this increase in revenue. But look at the figures for hospitals and waiting lists—and the report details a large number of these over that period. For example, in Victoria there has actually been a decline in the percentage of total public hospital emergency visits seen on time. In Victoria, we have had dramatically increased GST revenue. The great bulk of that is going to health, education and policing but we have actually seen a decrease in the number of patients that are seen on time. Surely it is incumbent upon state governments, who have massively increased resources, to start returning that windfall, in the case of Victoria, to the people of Victoria. This stuff is not rocket science.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

New South Wales.

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

We are not going to put Victorian money into New South Wales, Senator Conroy. I find that quite extraordinary coming from Victoria. New South Wales has enough problems of its own; I do not think we need to do anything to assist them. When you look at the increased revenue and then at the service provision that has flowed from it, it is quite clear that this has been wasteful use of dramatically increased GST revenue.

What happened was that the states demanded, after decades of the farce that we all remember—the farcical Premiers Conference—that they have a revenue formula. While they were running around playing politics in relation to the GST when it was first suggested, when push came to shove they jumped on it. I think it was Paul Keating who said that you never stand between a state Premier and a bucket of money. They grabbed it and they have seen quite dramatic increases in their revenue. We are in buoyant times. This government, through good economic management, has given the states the ability, particularly through property taxes, to dramatically increase their revenue over and above the GST. As this Menzies Research Centre paper says, they have not returned the dividend back to their populations. And Victoria is probably the worst of them. If you had listened to the state budget you would think they were doing a marvellous job, according to them. The realities are that in those basic services they are failing; they are failing in education, health, transport and policing. It is about time, as this report says, that they started spending that money appropriately and wisely.