Shayne Neumann (Blair, Australian Labor Party) Share this | Hansard source

I rise to speak but cannot support the motion by the member for O'Connor. I thank him for putting forward the motion and for raising an issue on behalf of his state. As a Queenslander, I share the frustration. I commend the member for Kennedy for his support for the Queensland government in seeking a better deal for Queensland. I think it is a really good idea that states like Queensland and Western Australia, which contribute so much to the wealth of this country in this day and age, should get a fairer deal with respect to finances. We are the ones who are producing mineral wealth and income and contribute so much to society. It is the same in America. The demographics of the United States has seen the population, economic activity and development move west and south. In Australia the development has moved north and west. The truth of the matter is that we can see the consequences of that even in this chamber, with new federal electorates being created in Western Australia, Queensland and places like that at the expense of electorates in the southern states. The truth is that Western Australia and Queensland do deserve a better share of the federal revenue pie. I look forward to working with the member for O'Connor and all the people in this place—from both sides of the chamber, from the outlying states, from Western Australia and Queensland—in seeking a fairer share for our states. It is acknowledged that both Queensland and Western Australia have contributed to the economic prosperity that we currently enjoy.

I look forward to the review. I look forward to the contribution of the Western Australian government and the Queensland government to the review. I will talk about the review a little later. It is worth remembering that the Howard government introduced the GST in 2000. In that time the states and territories have received revenue from the GST based on the recommendations of the Commonwealth Grants Commission. I thank the member for O'Connor for updating his information, because, due to the changes in the Commonwealth Grants Commission redistribution, Western Australia is receiving 72c in the dollar this financial year, not the 68c he mentioned in the motion. This equates to about $3.5 billion in GST payments this year alone.

The member for O'Connor chose to put forward this motion while, as I said, there is a review of GST distribution underway. That review was announced in March. In July the review panel released an issues paper and called for submissions. An interim report is due by February 2012 and a final report will be ready by September 2012. In terms of the way the wheels of government, reports, inquiries and commissions are undertaken, that is not a long time in the circumstances. The review will not affect the distribution of GST revenue in 2011-12 or 2012-13.

We appointed a number of people to the review panel, including Nick Greiner, John Brumby and Bruce Carter. Premiers like Greiner and Brumby have had many years of experience in dealing with COAG and national partnership arrangements. They have dealt with issues of horizontal fiscal equalisation and issues that challenge. Premiers like Greiner and Brumby have gone to meetings with Prime Ministers of both persuasions many times. It is quite interesting to see the premiers going to those meetings. Party politics often seems to be put aside and states' rights certainly come to the fore. It is a perfect examination of the Australian Constitution's role in a federation or commonwealth of states. The review has raised a number of issues. We hope the review will lead, as the Prime Minister's press release said, to a simpler, fairer, more predictable and more efficient distribution of GST to the states and territories.

I understand that the member for O'Connor is concerned for his state, as I am for my state of Queensland. I encourage him to express his concerns to the review panel via a submission. I believe that the cut-off date for submissions is 14 October this year. As he mentioned as well, I expect that the Western Australian government has already lodged its submission, and I expect that the Queensland government has done the same. I expect all the states and territories—from the smallest, Tasmania, to the largest, New South Wales—will want to make submissions to the review panel, because I am sure they will want to have their say. I am sure they want to express what they wish to receive and the basis upon which they wish to receive it in the future. The review is the appropriate venue for expressing concerns. Until the report is tabled, I think it is unwise to pre-empt the outcome of the review.

I would like to address the underlying notion in the member for O'Connor's motion that Western Australia should receive a greater percentage of the GST. That is essentially what this motion is all about. Western Australia generates more GST revenue at this point in time. That is why he proposes that his state should receive more of the bounty. I can say the same about Queensland—that is for sure. As a federal member from Queensland, I am not standing here and pre-empting the review, even though I would like to see Queensland get a fairer share of the revenue. The argument has been waged at meetings between the states by premiers, the Prime Minister and others. The argument is: if you raise more revenue, why should you not be entitled to more in return? Before we answer that, we need to understand the principles that guide the distribution of revenue.

The pool of GST revenue for this financial year is expected to be about $48 billion—a not inconsiderable sum of money. It goes to build a lot of roads, hospitals and schools. The revenue is not distributed equally on a per capita basis; it is distributed according to the principle of horizontal fiscal equalisation, or HFE. This ensures the states and territories have the capacity to provide comparable services for their residents based on comparable effort to raise revenue from their tax bases. It takes into account the fact that states and territories, for reasons beyond their control, sometimes have weaker or stronger revenue-raising ability per capita than the average of all states and territories combined. Since Federation, the federal government, regardless of which side has been in power, has been redistributing revenue from tariffs to the states. Appreciating financial support for financially weaker states was appropriate. The Commonwealth Grants Commission was established in 1933 to advise the government on grants to the states. It quickly adopted the idea of fiscal need as a guiding principle to allow states to function in a standard not appreciably below other states. The irony of this is that in the 1930s there was a threat of secession from the Western Australian government. This was spurred on in the 1970s by Lang Hancock and in the last few years by former Premier Richard Court. Until 1981 for a good 50 years Western Australia was the beneficiary of special or additional grants as it was considered to have a weaker economy along with South Australia, Tasmania and even Queensland, my home state. It difficult for me as a Queenslander to accept that my state's economy was weaker. Since 1933 the main donor states were New South Wales and Victoria—that is, they received less than their population's share of equalisation funding over the years. However, in the late 1990s and early 2000s that trend changed for WA and Queensland and we became donor states as mining, tourism and other industries flourished and the other states dived down comparatively. Around this time the source of funding distribution also changed—from July 2000 that was the GST. Here we are again dealing with the concerns of my home state, Queensland, and WA about the distribution of revenue to the states. The cry is 'unfair', and I often express that too as a Queenslander. It is not just in State of Origin; it comes at meetings between the premiers.

I know that Western Australia has happily been a beneficiary for about 50 years, and the member for O'Connor suggests we need to change the way we distribute these funds because WA is now a donor state. I would like to say 'amen' to that, brother, but I know that there is a review going on at the moment. What happens if the mining boom ends? We have $430 billion in the pipeline so it is not likely to end. What if we go back to supporting states that are negatively impacted? There is probably never going to be consensus on the GST distribution between the states, but we need to get the principles right and I am hoping that the review will get it right. I do not want to pre-empt the outcome of the review. Even the concept of horizontal fiscal equalisation makes me shudder when I think about what it actually means.

The Federation is not static and economic relativity changes. We know that. That is why we have instigated the review. The fact is that as a country we face some long-term trends that are driving the need for structural change. The mining boom we are experiencing has benefited Queensland and Western Australia, and I look forward to our states getting a fairer share in the future. I know we are heavily reliant on mining, but I am sure that in 100 years' time our nation's economy will look pretty different to what it does today. I am hoping states like Queensland and Western Australia will still get their fair share.

I cannot support the motion because it pre-empts the review. With the nation's interests at heart I look forward to the review findings getting a fairer share for Queensland and, indeed, for Western Australia. (Time expired)

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