Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

This afternoon in the Western Australian parliament Treasurer Nahan brought down a budget which confirms a $1.3 billion deficit this year, moving to a $3 billion deficit in the next financial year. It was the first budget deficit in living memory—certainly the first in more than a decade. It speaks, of course, of the need for selling state assets. I stand in this place this evening to rail against the circumstances that caused my state of Western Australia to go into deficit to the tune of $1.3 billion, moving to $3 billion and, indeed, putting our AAA rating at risk. Every Western Australian man woman and child contributes some $2,370 per year to GST and next financial year they will get back a measly $714. It is not enough, it is not good enough, and it must stop. Western Australia's GST will plummet to historic depths this year, with the state to retain just $1.9 billion of the $6.4 billion paid by Western Australian taxpayers—more than double the state's deficit. South Australia, with less than two-thirds of the population of Western Australia, will receive nearly triple the amount of GST per capita that Western Australia receives. Tasmania, a state with only 20 per cent of Western Australia's population, will receive $300 million more next year then Western Australia will receive. I urge the Senate and the parliament to consider these facts, because they are out of balance and they must be restored.

In 2014, New South Wales will get back 98c in the dollar. Victoria will receive 88c in the dollar. Queensland will receive $1.08, in consideration of past problems with cyclones et cetera. Western Australia will receive 38c in the dollar, reducing to 36c, 35c and even lower. South Australia will receive $1.30. Tasmania will receive $1.63. The Australian Capital Territory will receive $1.24 for every dollar it generates. The Northern Territory will receive $5.66—on a per capita basis, that is 10 times what Western Australians will receive from the GST. The question I ask is: how robust is our federation? The immediate issue is the distortion of the current GST distribution. Unfortunately, it exposes a bad flaw in our federation—and there is not a Western Australian of any persuasion who does not feel this keenly. If the objective of creating a federation of states in the first place was to create a stability that encourages common interests, reduces differences across territorial boundaries and delivers mutual benefits to the community, then we have fallen well short of those worthy principles—and the entire Western Australian community is sick of it.

When I gave my first speech in this place, in 2009, I made the observation that Western Australia produces 40 per cent of the nation's wheat and contributes significantly on minerals and LNG. At that time, Western Australia, with only 10 per cent of Australia's population, produced one-third of Australia's export wealth. At that time, I said that we only received 87 per cent of the GST revenue we generated, reducing to 57 per cent. We now receive 38 per cent, reducing to 30 per cent. At the time, I said that represented a loss of $300 million to the Western Australian economy. It now represents a loss of $6.3 billion to the Western Australian economy—when the Western Australian Treasurer was today forced to bring down a budget in which he reports a $3 billion deficit. Western Australia represents more than 70 per cent of all export income earned for Australia and it gets back a lousy 38c in the dollar. It is not good enough. The Commonwealth Grants Commission, the horizontal fiscal equalisation process, is flawed. It is crooked. It is not horizontal, it is crooked. It is not equalisation, it is discriminatory. The idea of one state receiving 30c in the dollar when another territory gets $5.66 is unfair. Where in the Grants Commission process is there a clause that rewards performance and penalises waste? I do not see it. Why would one state try hard when another state knows very well that it does not have to do anything to pick up its funding? Where is the incentive for our home state of Western Australia to continue investing heavily in projects that yield results for the entire nation when it looks to the east and sees others demonstrating little if any motivation to maximise their revenue and increase the GST share for everyone? Under the Grants Commission formula it is possible that Western Australia's share of the GST could reduce to zero dollars. If and when that day comes, or looks like coming, I will stand up here and I will say the federation is flawed and it is time that we re-examined it or we departed from that federation. We have had enough of this.

New South Wales, Victoria and Tasmania, all of which appear to have declared moratoria on gas exploration and development, are advantaged under the GST distribution system. Where will they derive their future energy sources to supply their manufacturing, their commercial and business activity and their residential services if they fail to develop their own resources? What are they looking at, a long pipeline from Western Australia or down from Queensland? Premier Colin Barnett is quite right when he says that Labor and the Greens did their best to turn Tasmania into a national park. When I owned a fuel distributorship in Tasmania in the late 1990s my significant clients included fishing, forestry and mining organisations. All three of these industries in that state have been decimated. Has it bothered them? Not at all. I will accede that Premier Will Hodgman is having a go, but under the previous Labor governments why would they bother when they knew that there was going to be a state that was coming to so-called equalise things fiscally under the GST distribution?

Victoria currently receive 88c in the dollar. I do remind Victorians what would happen to them if their share looked like going down to 38c or 30c in the dollar. We suffered in the last few days with the absolutely disgusting statements of the Victorian Premier and his mad Treasurer when they spoke about Western Australia being a mendicant state—how disgraceful. They seem to be very ignorant of history. It is the fact that historically Western Australia was a recipient state under the Grants Commission guidelines or those that preceded it. Let me make this point and strongly: Western Australia's receipt was never a subsidy or a handout but it was compensation to acknowledge the scandalously high tariffs that protected non-performing manufacturers in those rustbelt states against competition and the need for energy efficiency improvements. As Senator Cash knows, nobody can lay the allegation that Western Australia was not trying to maximise its revenue base throughout that time when it was a recipient state. Sir David Brand and Sir Charles Court battled obstructionist federal governments to open up the export of iron ore to Japan. Has Australia forgotten the enormous benefits that every citizen of this country has enjoyed as a result of the work of Brand and Court and those who followed them to open up that export industry?

How short-sighted that the eastern-state premiers and first ministers would starve the highest performing state—the state with the capacity to generate most royalty income for the nation. Even their own self-interest you would have thought would have caused them to want to put the cash where the best return was on offer. Offshore LNG royalties from the North-West Shelf projects such as Chevron's Gorgon, Wheatstone and Shell's Prelude will go straight to the Commonwealth because they are in Commonwealth waters. But who needs to create the infrastructure? Who has created a deficit over the last couple of years because of the infrastructure needed to support those projects? You guessed it, it is Western Australia.

If we do not get rid of this Grants Commission formula and if we do not go back to the drawing board the future of Australia's federation, for me, is at risk.