Senate debates

Tuesday, 13 February 2018


Goods and Services Tax

7:49 pm

Photo of Peter GeorgiouPeter Georgiou (WA, Pauline Hanson's One Nation Party) Share this | | Hansard source

I was reported in The Courier-Mail last week, accused of describing the way the GST revenue is divided amongst the states as a socialist plot. That's not quite what I said. I was making the point that progressive states which develop resources should not have to subsidise other states which don't develop their own industries or resources. What I actually said was that the way in which our GST formula is calculated under the current HFE system is extreme and the extent to which the formula is used isn't applied to the same extent anywhere else in the world. It embodies the socialist idea of redistributing wealth and making everyone equal. Nothing kills human enterprise faster than that.

This is not about pitting one state against another or an us-or-them argument. It's about fairness, economic efficiency, what's best for the nation as a whole and encouraging other states to develop their own resources. Western Australia receives only 34c for every dollar of GST it collects. Other states get between 89c and $1.81. The lowest any other state share has dropped is to 84c, which was Victoria in 1994. The Productivity Commission draft report released last October concluded that the current system is under significant strain as Western Australia's share of GFC has fallen to an extreme low. Western Australians get only $878 per capita compared to the average of $2,553. South Australian gets $3,671, Tasmanians get $4,601 and the people of the Northern Territory get $11,881.

Under proposals from the Productivity Commission, the current system whereby GST money is redistributed to elevate each state to the level of strongest state should be dumped. Instead, either an average level or the second-strongest-state level would be the benchmark. Under the average formula proposal Western Australia stands to gain an extra $3.2 billion per year, and under the second-strongest-state level Western Australia would get an extra $3.6 billion per year. There is a lot at stake here.

Some other states have argued that this is unfair, but these proposals would still leave Western Australia subsidising other states. It needs to be understood that, if several other states had a small per cent cut in their subsidy from Western Australia, it would translate into a significant gain for Western Australia compared to the current very low share WA gets now.

A lack of structural reform of the GST is the most important issue facing all Western Australians at present. It's been reported over the years of resource development that Western Australia has had to build extra infrastructure equivalent to that of the entire state of Tasmania. The state government has had to fund extra roads, freeways, ports, hospitals and schools as a result of this economic growth. Due to the development of our resources, both Labor and Liberal state governments are in positions where it's impossible to balance state budgets, with billions of dollars being diverted out of our state. The state government in Western Australia is now in a position where it has to cut back on core services even though the state as a whole provides the largest proportion of Australia's export income. No matter how you look at this, the system is unfair and is not in the nation's interests.

Research by the federal Parliamentary Library shows the annual carve-up of the GST has not only hit WA's state budget but also its jobs market. Since 2001, Western Australia has lost a staggering $41.5 billion to other states and territories when compared to the per capita GST allocation. According to the library, about 35 per cent of that, or $15.5 billion, would have been spent on job-creating infrastructure which would have generated 32,000 full-time jobs. What a wasted opportunity. While Western Australians have been building one of the world's showpiece mining industries, the benefits have been redistributed to those who have done none of the work. Victoria has been rapidly shutting down its mining industry and has been the biggest beneficiary, ripping out $18 billion.

We must get to a point where the distribution of the GST encourages governments to develop their own resources and economies rather than subsidising those who don't.