Senate debates

Wednesday, 14 November 2018


Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Bill 2018; Second Reading

9:35 am

Photo of Peter Whish-WilsonPeter Whish-Wilson (Tasmania, Australian Greens) Share this | | Hansard source

In my last remaining minutes, I'll go back and summarise my speech from last night. I started my speech talking about the adventures of Bunyip Bluegum and the very famous Australian literary classic The Magic Pudding. I talked about the allure and seduction of the magic pudding: how Bunyip Bluegum couldn't go past a pudding that needed constant eating. It was a cheeky, mischievous pudding that invited everyone to consume it constantly. I talked about how the adventure led to pudding thieves and a chase across the Australian bush trying to keep the pudding away from pudding thieves, and how this reflected the GST debate in this country in recent years.

I would like to say again that the Greens will be supporting the Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Bill 2018, but we want to be very clear that this GST legislation that we have before us is like a magic pudding—miraculously, more money is going to solve the problem and keep the pudding growing. The money to keep the pudding constantly replenished has to come from somewhere. We know this Liberal government has an atrocious track record of taking money from Australia's most vulnerable people. We just saw this week a 25 per cent cut to Foodbank announced by a Liberal minister. Luckily, our Prime Minister intervened after three days of public debate, including the National Farmers Federation wading into this debate. They're prepared to cut aid for fresh food to Australians, even at a time of relative fiscal ease. Can you imagine what's going to happen in five or 10 years time when they need to top up the GST magic pudding and they don't have the money?

We saw in 2013 zombie budget cuts to just about every aspect of our social security net—even to GP co-payments—the age of entitlement and ex-Treasurer Mr Joe Hockey smoking cigars with Senator Cormann, who's in the chamber today. I'll never forget that, and I don't think anyone in this chamber or the Australian public will ever forget that. There are two critical issues: where the money is going to come from and the fact that we need to maintain constant vigilance as to where in consolidated revenue those funds will come from. They have to come from somewhere.

The second point—and Senator Dean Smith is in the chamber now—is that I wholeheartedly agree that this should be the start of a much bigger debate about tax reform in this country and the role that the Commonwealth government plays in that. Like Senator Smith, I also agree that the Commonwealth government should play a bigger role in the taxation debate versus the states. I gave my views last night, and I'll give them again in conclusion. If we want to be talking about tax reform, let's talk about proper reforms to the petroleum resource rent tax. I note that the CEO of Woodside—Senator Cormann and Senator Smith, being Western Australian senators, would be familiar with him—talked about locking in the government's recent weak reforms to the PRRT. I'm not surprised that he wants to lock those in, because we need to go a lot further. We need to go a lot further than just changing the uplift rates on the PRRT. We need to actually put a 10 per cent floor on annual royalty from these projects that can be offset against future PRRT liabilities. The Greens will be announcing and releasing our costings on this shortly. We believe that is a much more equitable and fair way to roll out the PRRT into the future.

We'll also be releasing details, going into the next federal election—which I understand will be very soon—on significant tax reform around new resource rent taxes, especially mining resource rent taxes, super profit taxes. They're the kinds of things we believe the Commonwealth government should be leading on. We do need tax reform in this country, I agree with Senator Smith. Why have we walked away from super profit taxes on the mining industry, for example? There are a number of other reforms we would like to see. We would like to see carbon pricing, another national reform that was enacted by this government, that the Commonwealth government led on. We need to have a price on carbon if we're going to tackle emissions. It's not a silver bullet, I agree, but it's an absolutely necessary component for action on reducing emissions, even if we're going to meet our Paris targets, which may not be enough.

So we need to have the debate in here about the role of the Commonwealth and the federal parliament in looking at a price on carbon. And there's so much more. I welcome the debate on tax reform at the federal government level. We will be supporting this. We are very cautious about where this money's going to come from. We will be vigilant, to make sure that it's not taken off Australia's most vulnerable people, by whichever party is in power in the next term of government or the term after that, when the GST magic pudding has to be topped up. We'll be watching very closely for who the pudding thieves are going to be. We have our suspicions right here, right now, who they are. The Greens will play a role in parliament in keeping a future government, be it Labor or Liberal, honest on tax reform and federal government tax reform in Australia.

9:41 am

Photo of Murray WattMurray Watt (Queensland, Australian Labor Party) Share this | | Hansard source

I rise to make a short contribution on the Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Bill 2018. I want to make it clear at the outset that, like other Labor senators, I will be supporting this bill. The main reason, though, that I want to make a contribution is to highlight some very concerning remarks that were made in the debate on this bill by Pauline Hanson's One Nation senator from Western Australia, Senator Peter Georgiou. I was very disturbed yesterday when I heard Senator Georgiou's marks. We all know, in Queensland, that Senator Hanson and her party colleagues have a long history of saying they are prepared to sell out Queensland when it comes to GST funding. It would appear that, despite many rebuffs by the public and election defeats for Senator Hanson, she and her colleagues are still at it, trying to take GST funding off Queensland.

The comments Senator Georgiou made yesterday that I want to refer to include the following:

It's time to get real. Instead of trying to keep everyone happy, the government should announce that the distribution of GST will move to a per capita basis over a five-year time frame …

What would it mean for GST to move to a per capita basis, whether it be over a five-year time frame or anything else? For starters, the Productivity Commission, the federal government's own body, had a good look at this earlier in the debate about GST funding. They calculated that moving to a per capita system of distributing GST funds among the states would result in a cut of $1.2 billion per annum to Queensland in GST funding. That's $1.2 billion less that Queensland would have to spend on hospitals, on schools, on roads and on all sorts of other public services that Queenslanders depend upon.

I've been waiting for Senator Hanson, throughout this debate, to come in and contradict the remarks made by her colleague, Senator Georgiou, but as yet she has failed to appear. She has been conspicuously silent in this debate while her own colleague, Senator Georgiou, has been willing to get up and bash Queensland yet again over GST funding. From her silence on this matter, we can only interpret that she must agree with Senator Georgiou that Western Australia and other states should benefit in GST funding at the expense of Queensland.

My suspicion that Senator Hanson is supportive of this position from Senator Georgiou is backed up by previous remarks that she has made on GST funding. Senator Hanson has a long history of making comments that indicate she is prepared to reduce GST funding to Queensland to benefit other states. Who can forget the comments Senator Hanson made in January 2017, prior to the Western Australian state election, when she appeared in an interview on Perth radio station 6PR. She was asked: 'Will you, Senator Hanson, help us in Western Australia in this fight, and would you be willing to see the GST share of your home state, Queensland, reduced so that Western Australia can get a better deal?'

Her response: 'Of course I will; no problem.' And it wasn't long after that she denied ever having said that, but there it is in black and white.

That's not the only time, though, that she's made these kinds of comments. On 22 June this year in Queensland's The Courier Mail, Senator Hanson was quoted as saying that she would be willing to push for a fair and just share of the GST carve-up for WA even at the expense of Queensland. She said:

As a senator in this place, and you're making decisions on the floor of Parliament, you have to step outside your State as well, and you've got to look at what is fair and balanced … I'm the leader of a national party. You've got to look at what is fair and just, right across, for all Australians. And I will still stand by that.

She backed it up with further comments to The Courier Mail on 4 July this year saying:

… many Queenslanders would be happy to lose a few cents in GST revenue to increase funds to states like Western Australia.

Well I'm sorry, Senator Hanson, but moving to the per capita system that you and your colleagues have supported consistently doesn't mean that Queensland loses a few cents; it means that Queensland loses $1.2 billion per year, money that could be spent on essential public services right around Queensland.

I've been very vocal in the time I've been here about Senator Hanson having repeatedly sold out battlers on a range of issues. She's voted to cut penalty rates; she's voted to cut pensions; she's voted to cut funding for schools, hospitals and apprenticeships. And it's no surprise she does that because we all know she votes with the government, with the Liberals, 90 per cent of the time. What these comments that continue to come out from One Nation senators show is that not only Senator Hanson and her colleagues are prepared to sell out battlers but they're actually prepared to sell out every single Queenslander. They're prepared to sell out every Queensland man, every Queensland woman, every Queensland boy and every Queensland girl. They're prepared to sell out every nurse in Queensland, every teacher in Queensland, every motorist in Queensland and every pensioner in Queensland.

Senator Hanson should know better than anyone that Queensland is Australia's most decentralised state. It is an extremely expensive state in which to provide services. It's not just about providing services in inner city Melbourne or inner city Sydney; you've got to provide services in Brisbane, Rockhampton, Cairns, the Torres Strait and western Queensland—very remote places that are expensive to service but that deserve high-quality services from their state and federal governments. And, in order to do that, they require a fair share of GST funding, not to lose $1.2 billion a year, which is what Senator Hanson continues to advocate for.

This might well be Senator Hanson's greatest sellout yet. There's a long line of them, whether it be penalty rates being cut or whether it be supporting cuts to schools, hospital funding and pensions. But this one—supporting cuts to GST funding of $1.2 billion per year to Queensland—may well be Senator Hanson's greatest sellout yet. It's about as big a sellout as you can get in Queensland. I don't think it would even be a bigger sellout if 'The King' Wally Lewis actually put on a blue New South Wales jersey. That's how bad this is.

She is turning her back on Queenslanders yet again. I, for one, am sick of hearing Senator Hanson say one thing when she's travelling around Queensland—that she's sticking up for battlers and that she's down here in Canberra fighting for Queenslanders—and seeing her every time she comes down here line up with the Liberals to vote for cuts to the things that battlers need right throughout Queensland. And here she and her colleagues are again calling for Queensland to lose $1.2 billion a year in GST funding.

I think it's important that Senator Hanson finally come out today and express her position on this bill. Does she support what her colleague is saying—moving towards a per capita system of distributing GST—or is she actually prepared to do her job as a senator for Queensland and fight for the benefit of Queensland, fight for the extra $1.2 billion a year in GST funding that her colleague wants to take off Queenslanders? The time for hiding is over, Senator Hanson. Come and state what your position is. Do you support changes to the GST system which would rip off Queenslanders or not?

9:49 am

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | | Hansard source

Firstly, I thank all those senators who've contributed to this debate on the Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Bill 2018. Our government has long recognised that what has been happening with WA's share of the GST is unfair, not sustainable in a federation and has to be fixed. The proposition that, in a federation, stronger states should support other states so that all have the capacity to provide similar outcomes for their populations is a good and important principle which we must continue to protect and preserve. However, an arrangement which puts any one state into the position, as has happened to WA in the past, where it receives less than 30 per cent of its share of the GST back as a result of fiscal equalisation cannot possibly be sustained.

All of Western Australia's federal Liberal members and senators have long argued that this is an unacceptable situation for our home state and must be fixed. Firstly, we secured about $1.4 billion in federal GST top-up payments for WA to provide additional funding towards much-needed WA infrastructure. This was always intended as a short-term measure. Initially in 2015-16 it effectively stopped the drop in WA's share of the GST from 37.6 per cent to below 30 per cent. For this financial year—the 2018-19 financial year—our top-up payments have effectively lifted WA's share of the GST to 50 per cent.

To facilitate a more structured, ongoing resolution to this issue, WA Liberal members and senators advocated for and secured the Productivity Commission inquiry into the impact of GST-sharing arrangements on national productivity and growth. That was the basis on which, as a government, we focused on the national interest. We developed our plan to make GST arrangements fairer for WA and better for national economic growth and job creation, while also making sure that every state is better off.

This bill reforms GST payments to the states and territories by providing a fairer and more sustainable way of distributing the GST. It is a plan which addresses a longstanding unfairness for Western Australia in a way that leaves all states and territories better off. Since it was introduced in 2000, every dollar of GST raised has been distributed to the states and territories according to the system of horizontal fiscal equalisation. While this worked in a relatively predictable way in the early years of the horizontal fiscal equalisation system, the mining investment boom demonstrated that Australia's horizontal fiscal equalisation system struggles to function well when faced with economic shocks. In particular, the mining investment and construction boom created significant volatility in the distribution of the GST.

The government's plan will firstly create a new equalisation benchmark—the stronger of New South Wales or Victoria, whichever is higher. Secondly, it will introduce a permanent in-system relativity floor of 0.7 from 2022-23, increasing to 0.75 from 2024-25. Thirdly, it will permanently boost the GST pool of funds available for distribution to the states and territories by providing direct Commonwealth cash injections each year from 2021-22 onwards. These are in addition to GST collections. Fourthly, during the transition period from 2021-22 to 2026-27, states and territories will be guaranteed the better of the old system or the new system. Fifthly, by 2026 the Productivity Commission will conduct an inquiry to assess whether the updated system is working efficiently and effectively and operating as intended. Sixthly, it will separately provide short-term top-ups to Western Australia and the Northern Territory to keep their relativities above 0.7 and 4.66 respectively from 2019-20 to 2021-22.

As a result of this legislation, all states will be better off, with the Australian government injecting an additional $9 billion over 10 years to 2028-29. The GST pool from 2026-27 will grow by more than a billion dollars each and every year compared with what would have occurred without these reforms. We have provided a national solution to a national challenge that was in the too-hard basket for too long. I commend this bill to the Senate.

Question agreed to.

Bill read a second time.