Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I rise to make a contribution to the debate on the Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Bill 2018. Labor supports every state and territory and our Commonwealth getting their fair share of GST revenues. Federal Labor has consistently led the way in arguing for GST reform that addresses the needs of Western Australia while also preserving much-needed funding across the other jurisdictions.

It was of course Labor that first put forward policy to ensure that Western Australia got its fair share, without punishing the other states and territories. We announced this policy, our Fair Share for WA Fund, well over a year ago, at the end of August 2017. This policy recognised the issues that Western Australia had been experiencing and committed $1.6 billion at the time, funded by our sensible measures to improve the budget, which would have put Western Australia up to a 70c level. At the time, the coalition government criticised us for employing this top-up method. The then Treasurer, now Prime Minister, Scott Morrison, said, 'Top-ups forever is a mug's game.' This was merely the first in a number of inconsistencies in the government's approach to this issue, particularly over the course of last year. Indeed, after the government released its interim response to the PC inquiry, the Leader of the Opposition, Bill Shorten, again led the policy debate in July of this year when he said:

Make the floor the law.

This was also ridiculed by the government, but just what has the government now done with this bill? They've accepted a 70c floor and a 75c floor, along with top-ups going on forever.

The government's obstinacy was again on display when shadow Treasurer Chris Bowen, followed by the state and territory treasurers, unanimously called for a guarantee within the legislation so that no state or territory would be worse off as a result of the government's proposed new model. The government, at first, refused to heed these calls, saying there didn't need to be one because there was all this money available to the states. And yet, as evidenced in this legislation, Labor's position has been adopted and there is a guarantee within the legislation. While Labor has been consistent and principled in its approach, the government's approach has instead been to, at first, criticise what is a sensible proposal, then vacillate on their own position before, finally, backflipping.

Ultimately, however, we're pleased the government has seen the sense of Labor's proposals and broadly adopted them, albeit utilising them with a slightly different mechanism. The need for a reconsideration of how the GST is distributed is well known, particularly as it relates to Western Australia. Never in the history of the GST has any other state or territory fallen below 86c in terms of their relativity, except, of course, Western Australia, which got as low as 30c in 2015-16 and 2016-17.

It's important not to forget the role that a certain member of the Morrison government played in relation to the unenviable situation that Western Australia found itself in, particularly in relation to the GST. It was the then Treasurer of Western Australia, who, in early 2011, along with the then Premier, Colin Barnett, decided to raise royalties. This was a cynical and transparent attempt to force a change to the GST distribution so they could keep most of the money. And just who was that Treasurer? It was none other than the Attorney-General, Christian Porter, the member for Pearce. What was the result of this cynically engineered ploy?

Well, as the shadow Treasurer put it to the House, it was to make 'a complete and utter mess' of the Western Australian state budget.

Turning to the bill itself, the bill contains several elements that make up the government's proposal for the new GST distribution model. The bill makes changes to the GST distribution model, changing the equalisation method for horizontal fiscal equalisation from the fiscally strong state which was Western Australia to the strongest of either New South Wales or Victoria. The six-year transition period from the existing system to the new system starts in 2021-22 and finishes in 2026-27. This bill also legislates for a floor, which is precisely what Labor had been calling for. The bill contains a 70c floor for all states and territories in 2022-23 and 2023-24, rising to a 75c floor in 2024-25.

The bill also contains a mechanism whereby the Commonwealth will provide an additional top-up into the GST pool in perpetuity. From 2021-22 onwards, the Commonwealth will provide hundreds of millions of dollars to the states and territories: $600 million per year, indexed to GST revenue growth, from 2021-22 to 2023-24, rising to $850 million per year—again, indexed to GST revenue growth—from 2024-25 onwards. This will lead to top-ups of over $1 billion a year.

The bill also contains a legislated guarantee that no state or territory will be worse off. This is a cumulative guarantee. If a state's or territory's entitlement over the transition period from 2021-22 to 2026-27 is less than they would have received, the guarantee will activate. On balance, we think this is a reasonable approach; however, it's not as if there are no concerns about it. The government has only provided a guarantee for the transition period. What happens beyond that time? What is to stop GST revenue being taken away from jurisdictions such as Tasmania, South Australia and the Northern Territory? Notwithstanding that, we on this side of the chamber would like to see a long-term Labor government still in office at the end of this transition period. What could a future Liberal government do: cut schools and hospitals, as is their record and their preference?

The bill also contains a requirement for a review by the Productivity Commission on whether the changes are operating efficiently, effectively and as intended. The review will also look at the fiscal implications for each state and territory as a result of this legislation. The Productivity Commission must submit its report to the government by 31 December 2026. We have no issues with this review. I would note, of course, that the last time the government initiated a PC review into the GST it actually rejected the recommendations—and with good reason, given that the commission's preferred model would have been completely unacceptable.

I also note that this bill went through a short Senate inquiry. This provided the chance for states and territories to make submissions and to ensure that this legislation is doing what it is supposed to do. Again, let me make it clear that, while Labor will support this bill, it's not as though the states and territories did not raise concerns with the bill. Evidence to the Senate inquiry from the Victorian government went to the fact that the forecast of future relativities is subject to a high degree of variability, which could leave states and territories worse off. State and territory governments were notably concerned that the Commonwealth top-up funding might come at the expense of cuts to other funding arrangements. While a letter from the federal Treasurer to state and territory governments stated that 'any additional financial assistance referred to in the bill will not be offset or partially offset by a decrease in other grant funding to the states', there were still concerns raised.

Federal Labor will hold this government to account on its commitment not to cut other funding to states and territories. We will scrutinise the imminent MYEFO budget update to determine just how the Morrison government will be paying for these top-up payments. Labor senators are of the view that the letter from the federal Treasurer to the state and territory treasurers ought to be tabled during the parliamentary debate so that the government's commitment to this issue can be strengthened.

This is a government that can't be trusted. This is a government that is so consumed by its internal conflicts that it just can't get economic policy right, and this is another example. They have backflipped on each of the issues that Labor raised, and raised for due and proper reasons. This government is inconsistent. It's incoherent on economic policy. It makes promises and breaks them. Remember this government's commitment 'no cuts to education, no cuts to health, no cuts to the ABC or SBS'? Remember that?

Have a look at what they've done in the last few days. They have made cuts to Foodbank, reducing its funding from $750,000 to $427,000. This is an operation, a non-government organisation, that sets about trying to help the most disadvantaged in our country. Foodbank leveraged their funding to $8 million through support from business. Across the country, 2,600 charities rely on Foodbank's support. So the government has cut funding to Foodbank.

Trying to do some sleight of hand, the government have provided $444 million to the Great Barrier Reef Foundation—a small, private foundation—without a tender. That's great economic policy! They have provided $200 million to a project in Bob Katter's seat in return for his vote. What's that about? No wonder they're handing $200 million to a lower house member when they are in such a parlous state, when they are depending on the vote of Mr Katter.

They are providing $60 million to deliver One Nation's policy on apprentices. Why would anyone take up any policy position of One Nation, especially a policy position that the coalition are now describing as the 'bush wage' to support apprentices? It is basically paying for apprentices' employment in their first, second and third years to various levels. The government actually subsidises apprentices generally, across the country, to the tune of $9,000. This attempt to get the support of One Nation will cost $92,000 per apprenticeship. Where's the economic rationality in that? Where is the logic in these decisions that this government is making, when it's desperately trying to cling to government?

They're describing this so-called 'bush wage policy' as a 'pilot'. Well, if the pilot were run out across the rest of the country, it would cost $11 billion to subsidise apprenticeships across the nation. It's absolute economic nonsense. There are better, cheaper and more effective ways to deal with ensuring that apprentices are taken on, such as Labor's proposal that one in every 10 employees on government-funded projects is an apprentice. The government should stop this nonsense of trying to ensure that unions in the construction sector can't negotiate and reach agreement with their employer on employing apprentices. The government have made that illegal. By making that illegal, they now have to hand over $92,000 for every apprentice as part of their appeasement of the racist party, One Nation. They also provided $2 million to former Senator Bob Day to try and make sure that former Senator Bob Day voted with them. Then Senator Day had asked for $1.4 million to subsidise 20 apprentices, and the government handed him $2 million. Where's the economic rationale in that?

This government must be watched. This government is about making promises based on securing its own survival. Its priorities are crazy. It's no wonder that Prime Minister Morrison described his own government as 'muppets', and it's no surprise that former Prime Minister Turnbull described those that knifed him in the back as 'mad'. So we've got the M&Ms, the 'mad muppets', across the chamber. That's all they are—a pathetic, declining government; a government in chaos; a government that claim economic superiority but don't have an economic brain in their head. Despite this, Labor will support this bill. We'll support the bill, but we will continue to monitor the crazy decisions that this government makes. We will continue to oppose bad decisions. We will continue to oppose bad economic decisions.

Let's look at this government's record on economic decisions. What was their first position? It was an austerity budget in 2014-15 that would have made pensioners $80 a week worse off over 10 years and would have resulted in young kids getting no social security payments for six months—on the streets with nothing to spend and nothing to look after their basic needs. Then the government moved from that to handing the GST over to the states. Remember that economic policy? Prime Minister Turnbull announced it at Penrith Stadium, and it lasted a day and a half. Then they moved from that to other crazy propositions, like trickle-down economics—that workers would be better off if the big end of town was given $80 billion and the banks were given about $17 million. The government have no economic credibility. They are a mess. We need to get to an election and we need to get rid of these mad muppets as soon as possible. (Time expired)

Slade Brockman (WA, Liberal Party) Share this | Link to this | Hansard source

I rise this evening to make a very short contribution on the Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Bill 2018, because this is a government that is getting on with the job and we don't need to spend the next 20 minutes talking about that. But I do wish to pay tribute to six people who have made a really significant contribution. The first is, of course, the former Treasurer, the current Prime Minister, Scott Morrison, who is the person who has managed to shepherd through what was said to be—and I won't name the people who said this; we all know who they were—impossible to achieve. But he has achieved it.

The other people I wish to pay tribute to are my Senate colleagues from Western Australia. Two of them are in the chamber this evening—Senator Dean Smith and Senator Linda Reynolds. The others are Senators Michaelia Cash and Mathias Cormann. The genesis of this significant national reform and the hard work that was done in achieving it were largely done before my time in the Senate, and I wish to acknowledge the significant contribution of my four colleagues in standing up for the rights of Western Australia, standing up for the proper place of the Senate as a states' house in this Federation and achieving what many said was impossible: significant reform of GST-sharing arrangements to the significant benefit of our home state of Western Australia. I thank you all.

Sue Lines (WA, Deputy-President) Share this | Link to this | Hansard source

I too rise to support the Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Bill 2018. But I really do want what actually happened to be put on the record. Senator Cameron, in his contribution to this debate, outlined in a series of events how we got to where we are today. I have to say that we got here with the government dragging its heels and criticising Labor every step of the way. We got here because Premier Mark McGowan made this his No. 1 priority on winning the election last year.

When we look at where WA has come from in getting a fair go for GST, we had, for many years, a Liberal state government and, coinciding with that, a Liberal federal government. Within the Western Australian component, from the Liberal Party we had cabinet ministers and other ministers with very important portfolios, and none of them lifted a finger. I will pay tribute to Senator Dean Smith, who, with a Liberal state government and a Liberal federal government, wasn't able to deliver GST reform but wasn't afraid to speak out about it. He was the only one.

When we look at Senator Cormann, part of his experience as a senior minister from Western Australia has been as the acting Prime Minister. What did he do for GST reform? Nothing—diddly squat! What did Ms Bishop, the member for Curtin and our former foreign minister, do about GST reform when we had a Liberal government in the state and here? Nothing! What did the Attorney-General, Mr Christian Porter, the member for Pearce, do? I might just leave him, because I'd really like to put his record on the Hansard tonight. What did Minister Keenan, the longstanding member for Stirling and a minister in successive Liberal federal governments, do about GST reform in WA? Nothing—absolutely nothing! Mr Wyatt became a minister more recently, but he's been the long-term member for Hasluck. What has he done on GST reform? Nothing! What has Mr Steve Irons, the member for Swan—sadly, my local member, although, hopefully, in the election we'll change that—done about GST reform? I follow Mr Irons carefully and closely; he's my local member. Nothing! I've never ever seen a leaflet from Mr Irons that talked about the need for GST reform. Minister Cash was a fairly high-profile minister who had a fall from grace. What did she do on GST reform? Nothing!

So on and on it goes. All these very important people, very important ministers, in this federal Liberal government—one of them was the acting Prime Minister for some time—have done nothing.

I want to come back to Mr Porter, the member for Pearce—and, hopefully, that will change too because there are a number of marginal seats in Western Australia and they play into this agenda as well. He was the Treasurer in the state Liberal government under Mr Barnett. Mr Barnett was absolutely booted out of the parliament last year in the state's election, suffering the biggest loss the Liberal Party had ever seen in Western Australia because he put the state into record debt. We hear those opposite—in particular, Minister Cormann—talking about debt and deficit. What did they ever say to Mr Barnett when he racked up a massive debt so bad that the WA treasury just before the state election last year raised real concern about the level of interest payments Western Australians were being saddled with? Who was the Treasurer who incurred most of that debt? Who was the Treasurer?

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Can I guess?

Sue Lines (WA, Deputy-President) Share this | Link to this | Hansard source

Go right ahead, Senator Cameron.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

The member for Pearce.

Sue Lines (WA, Deputy-President) Share this | Link to this | Hansard source

It was the member for Pearce, Mr Porter. Mr Nahan had a bit of a hand in it as well, but when you look at the reports of the Western Australian economy most of that debt belonged to Mr Porter. No wonder he took the seat of Pearce and skedaddled out of the state parliament as quickly as he could. No wonder. So Mr Porter bears a big responsibility for the debt that Mr Barnett's government left the Western Australian people with. Is it any wonder that they were unceremoniously kicked out of office last year? Mr Porter then came here. I'm the duty senator for Pearce, so I like to watch what he's up to as well. Never did I see Mr Porter trying to do anything about the GST.

When Mr McGowan came into power, he said that he would do something about the GST—and, to his absolute credit, he has. He also pledged to the Western Australian public that he would reduce the debt, and he's done that. Under Mr Porter, Mr Nahan and Mr Barnett, WA lost its AAA credit rating. There were all sorts of downgrades. It was just a disgrace. But what have we seen the Liberals doing in Western Australia? Suddenly they realised the only person who ever mentioned the GST was Senator Smith, so they started running full-page ads having a go at Labor, somehow trying to run this story that Labor weren't interested in fixing the GST. As Senator Cameron has outlined, we were the first people interested. We put the Fair Share for WA Fund up, which effectively would have taken the GST floor to 70c. Mr Morrison just mocked that. We insisted that, when Mr Morrison finally got around to putting a fix in, the floor be legislated. He scoffed at that. In fact, I was at a media conference with Senator Wong when she was asked, 'But surely when the bill comes before the parliament, Senator Wong, you'll back off on that; you won't push with this ridiculous idea to legislate the floor?' Senator Wong said, in no uncertain terms, that we would. And what happened? Suddenly Mr Morrison was onboard. So we've now got the floor legislated. We also said, 'No other state or territory is to be worse off.' Again, we were given the promise: 'Trust us. We made those commitments about the ABC, SBS and school funding. You can trust us. We never go back on our word.' Of course, the states and territories were never, ever going to sign up to that. So we now have the guarantee in place.

But I think the thing that really got me—it didn't get under my skin; I just thought, 'Boy, some people are really cheeky!'—was when I got a letter from Mr Nahan, one of the treasurers who put WA into massive debt. He didn't just send it to me; he sent it to Senator Dodson, Senator Pratt and Senator Sterle. But as he was pressing the email 'send' button he also sent it to the media. So it wasn't really a letter to Labor senators; it was a bit of political grandstanding. Dr Nahan tried to make a claim in this letter that somehow Labor, who were on the public record, weren't going to support the GST fix.

I took the opportunity to ask Dr Nahan a few questions of my own. When he was treasurer, what was he doing about this massive debt that Mr Porter started and he continued? What was he doing about that? What was he doing about the massive unemployment rate that, along with Mr Barnett and Mr Porter, he created? What was he doing about the loss of our AAA credit rating? All this happened under Dr Nahan, Mr Porter and Mr Barnett. Well surprise, surprise! I haven't had a response from Dr Nahan. I thought it was fair, because he'd published his letter, that I publish mine, so I published that letter.

It didn't stop there. I then got a letter—and I presume other senators did as well—from Senator Cormann. His is somewhat longer than Dr Nahan's, setting out all the evil things that Labor is alleged to have done. Perhaps I will let Minister Cormann answer for himself, but I don't think he published this to the news media. He certainly showed them. So, because there was the benefit of the doubt, I didn't publish mine to the media. I thought: 'Fair go! He didn't publish it; he only showed it.' But he, too, picks up some of Dr Nahan's nonsense about trying to pretend that Labor wasn't supporting the GST.

I went back to Minister Cormann and asked him the same questions—the same ones that Dr Nahan wouldn't answer. We've heard in here that he likes to talk about debt and deficit. He likes to say that the federal government, despite its massive debt at the moment, somehow has reduced debt. I thought, 'I'll ask him the questions.' So I asked him, as the federal counterpart—he's part of the Liberal Party, and presumably they talk to one another—if he had ever raised concerns with Mr Porter about the massive debt he'd occurred. I asked him if he'd ever raised concerns with Dr Nahan about the loss of the AAA credit rating. I asked Minister Cormann if he had raised concerns with Mr Barnett about the rising and massive record unemployment under the Liberals in Western Australia. I asked Minister Cormann why there were these reports from Treasury warning about the dangers of the Western Australian debt. Surprise, surprise! I heard nothing back from Minister Cormann either. I say in my letter: 'I note your letter to WA Labor senators and MPs regarding the GST. It's hard to see this letter as anything other than a cheap political stunt, as it was given to the WA media at the same time it was sent to us.' I can only conclude that Senator Cormann isn't interested in responding to my questions about what was going on in Western Australia under the Barnett Liberal government and, indeed, when Mr Porter was the treasurer, what was happening with our debt. As I said at the outset, there was just silence, when Colin Barnett was in power, about fixing up the GST.

I attended the Senate inquiry into this bill. It was really interesting to hear from the states and territories. It was really a very productive day to hear from everyone. So important is this GST fix to Western Australia that Premier McGowan came and gave evidence. That is unprecedented, I think. I know that he will be watching this debate tonight. What Mr Barnes, the Under Treasurer, said at the inquiry was interesting. He said the disadvantage 'is not the size of WA's total revenue base or the growth in that total revenue base; it is the composition of that revenue base'. The really important point is, he said:

… about 18 per cent of our total revenue comes from mining royalties and about 86 per cent of that comes from iron ore. That's where WA is the outlier compared to the other states, and it is that outlier composition of our revenue base that drives the distortions and the disincentives under the current system.

He thought that 'was quite an important distinction', and I agree with him. He also said:

Just to highlight those distortions and disincentives, in the last financial year WA collected about $4.5 billion in iron ore royalties and this year our GST relativity is 47.3 per cent. If, instead of collecting that $4.5 billion in iron ore royalties, we instead collected the same quantum of revenue from payroll tax or stamp duty, our GST relativity would be over 100 per cent and we wouldn't be sitting here today.

Mr McGowan made similar comments in talking about gold and iron ore. He made the point:

I could give you just one example of that. Because Western Australia is a big iron ore mining state—other states have small iron ore industries, but we have … the big one—90 per cent of what we raise from iron ore is redistributed.

There was a similar amount from gold. About 60 per cent of gold revenue is redistributed.

I do commend the bill. I'm keen to get it voted on and I'm keen for Western Australia to get its fair share. I am very pleased that the Morrison government has followed Labor's lead and is going to legislate the floor and that it has made the guarantee that no other state or territory will be worse off. I would not have copped a situation where WA got something and other states and territories got nothing, because it should be fair and we should have a situation where everyone gets a fair go. Now that Mr Morrison has followed Labor's lead, that is in fact what will happen.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

The bill before us today is a lie. It is called the Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Bill 2018. If it was just rearranging the distribution of GST revenues to make it fair—whatever 'fair' might mean—at least it would have no overall financial impact. What we have instead is a bill that will cost taxpayers $9 billion over 10 years. What is going on here and who is stretching the truth?

This bill is fundamentally about authorising the Commonwealth government to throw $9 billion at state and territory governments, over and above the GST revenues they already receive. This bill is not about a fair share of GST. It is about grabbing $9 billion from taxpayers in addition to their payment of GST and throwing that money to state and territory governments on an unconditional basis in what amounts to a massive bribe to get out of a political problem caused by the crazy fiscal relationships between the states and the Commonwealth. This is also not some trivial transitional grant; it is permanent change, entrenched in law. No longer can there be any pretence that state and territory governments receive GST revenues and the Commonwealth government receives income tax. The Commonwealth collects both GST and income tax revenues in massive proportions, massive quantities, and then decides—now on a political whim—what it might pass to state and territory governments. This time, that whim is to save some seats in Western Australia, but who knows what it might be in the future, because there is no reasoning or predictability?

The truth is federal financial relations in this country are a shambles. We have a federal government that raises the money, and state and territory governments that spend it, with next to no accountability anywhere. The Liberal Democrats have a fully funded, costed and published plan to get rid of the interstate welfare system called horizontal fiscal equalisation. Under our plan, taxpayers would see their tax bill slashed in half so they would keep much more of their hard-earned money. Crucially, each state government would be required to raise all the money they spend, so they would have no-one to blame but themselves if they ran out. There would be no more blaming the Commonwealth because they didn't get enough. But let's get back to this bill.

Of course, the great bulk of the $9 billion in handouts authorised by the bill is being thrown at the beggar state and territory governments—in particular those in Tasmania and South Australia. Regardless of which major party is in power, these beggar governments continue to hold back the prosperity of the people they are supposed to represent. These beggar governments only see the upside of preventing development, of smothering their small businesses in red tape and of making fanciful commitments to renewable energy. They should feel the downside of more expensive energy, fewer bustling small businesses and fewer jobs. But, for these beggar governments, such a downside is merely a recipe for more and more compensation from taxpayers in the rest of the Federation.

I don't expect this Senate to object to throwing billions of dollars of taxpayers funds at beggar governments in places like Tasmania and South Australia; after all, all the major parties are infested with a disproportionate number of beggar politicians from those states and territories. But it should. In fact, what we need is a 'begxit', where the beggar states exit the Federation. But the beggar governments of these states never do anything for themselves, so they won't exit of their own accord. The rest of us, with the Liberal Democrats at the vanguard, will need to arrange it for them.

Chris Ketter (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I rise to add my contribution to the debate on the Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Bill 2018. My contribution won't be as colourful as Senator Leyonhjelm's.

I do want to make it very clear at the outset that Labor does support this bill, but we do so with quite some degree of reservation. My reservation centres on three key points: firstly, the arbitrary nature of the Commonwealth's decision to introduce this legislation while questions from the states and territories remain unanswered; secondly, the complete lack of transparency from this government about how it intends to fund the top-up policy that this legislation introduces; and, thirdly, the likelihood that this untrustworthy government won't make good on its commitment not to cut other crucial funding to states and territories. Health or education funding, national partnership funding agreements on housing and early childhood education and care could all be at risk under a government that changes its mind and its Prime Minister at the whim of the polls. I will come back to these points shortly.

I also want to point out that it is Labor that has led the way when it comes to GST reform. It was Labor that listened to the concerns of the states and territories and took them seriously. It was Labor who took on board the plight of Western Australia, where not only the financial mismanagement of the Liberal Barnett government—although that was a key factor—but also the effects of the time lag in the current method of GST distribution meant that a drop in Western Australia's share coincided with a sudden economic downturn, significantly affecting the state's ability to balance the books. That's why Labor announced the Fair Share for WA Fund, a fund designed to bring Western Australia up to the equivalent of 70c in the GST dollar.

During the course of the Senate Economics Legislation Committee inquiry into this bill, the Premier of Western Australia, Mr McGowan, attended—as Senator Leyonhjelm indicated—and he made it very clear that he thought that the Labor announcement of the Fair Share for WA Fund was a game changer in ensuring that there was a positive outcome for West Australia. There was a policy vacuum in this area. The government wasn't coming to the party and so it fell to Labor to come forward with a tangible policy response. Mr Shorten and federal Labor came forward with that policy response to a long acknowledged problem.

Contrary to what the coalition subsequently proposed, the Fair Share for WA Fund was structured to ensure that other states and territories would not see any reduction in their GST funding. I'm a senator for Queensland, so, whilst we would like to see Western Australia dealt with fairly, we certainly don't want to see any reduction in funding for Queenslanders, particularly given the fact that Queensland is a decentralised state. Once the coalition came to the party on GST reform, Labor fought for and won a seven-year guarantee that no state or territory would be worse off under the new funding arrangements. This important Labor achievement is one of the key reasons that I will be voting for this bill.

I will now outline, for the benefit of those listening or watching, what this bill is proposing to do. It largely responds to a report from the Productivity Commission inquiry into horizontal fiscal equalisation. The report recommended changes to the method of distribution of the GST, in recognition that the current method of distribution is sometimes disadvantageous, particularly in the case of economic shocks in our economy and particularly in the case of Western Australia in recent times. To change the method of GST distribution, this bill amends the Commonwealth Grants Commission Act 1973 and the Federal Financial Relations Act 2009 to transition our current system of full horizontal fiscal equalisation, or HFE, to a system of reasonable equalisation, which means equalising to the stronger performing state of New South Wales and Victoria. The bill goes on to introduce a minimum GST-revenue-sharing relativity, or GST relativity floor, that may be determined by the Treasurer for any individual state or territory, and it also permanently boosts the GST revenue pool with additional Commonwealth financial assistance.

The bill also provides for measures during the transition period, including payments to be made to any state or territory with a GST revenue-sharing relativity below a relativity factor of 0.7, or 70c in the dollar, later moving to 0.75; payments to be made to the Northern Territory if its GST-revenue-sharing relativity falls below its determined relativity factor for 2017-18; and a guarantee that each state and territory will get the better of the current distribution system or the updated distribution system during the transition period. In addition, the explanatory memorandum to the bill provides that the Productivity Commission will be required to conduct an inquiry at the end of the transition period, and additional Commonwealth funding under the new method of distribution and top-up arrangements will be nearly $9 billion over 10 years.

I would now like to go back and look at the history of GST reform, for the benefit of those listening. The GST was introduced in the year 2000 by the then Prime Minister, Mr Howard—although, as people listening might recall, the following comments were made by Mr Howard in 1995, before he was elected:

There's no way that a GST will ever be part of our policy … Never ever. It's dead.

After being elected, the Liberals changed their tune, with Mr Howard—

Debate interrupted.