Rick Wilson (O'Connor, Liberal Party) Share this | Hansard source

I stood here in this chamber last week and spoke briefly about this parliament's opportunity to reform the GST. I believe, as I said then, that we have an opportunity to change the system in a way that makes the Australian economy stronger. But I fear that opportunity is lost on the members sitting across the chamber. The confusing and limp rhetoric from the opposition tells us two things: one, that the opposition has failed to grasp the substance of the Productivity Commission report, because the WA members on the other side seem to all share different views about the next step; and, two, that the Leader of the Opposition and the shadow Treasurer have ruled out my meaningful reform to the Commonwealth Grants Commission formula. These past two weeks have shown us that Labor don't really have any appetite for reform. They'd rather tread water and hit the problem with a wet lettuce leaf in the hope that it goes away. I wonder how many of my colleagues on the other side have even read the Productivity Commission's draft report, but I'll return to that in a moment.

We all know the background for the Productivity Commission inquiry. WA's relativity—that is, our share of GST revenue—has plummeted. As the strongest state, horizontal fiscal equalisation means we are propping up other jurisdictions. I don't think anybody in Western Australia would argue that equalisation in Australia is a bad thing, but we do say that the principle, although created with the best of intentions, has been applied far too aggressively. The logic of raising every state to the highest standard is a bridge too far, and the Productivity Commission acknowledges that. Their report states:

… equalising comprehensively and to the fiscally strongest State means that when there is an outlier, the redistribution task is considerable and the standard being equalised to is potentially volatile

WA is the outlier here. In 2015-16, when no other state fell below a relativity of 0.89, Western Australia dropped to 0.3. This is all in the report, by the way, should any member of the opposition care to read it. That relativity has only marginally risen, to 0.34, which is out of step with our current fiscal situation. The three-year assessment period and the two-year time lag applied to the GST distribution have hit Western Australia particularly hard. The mining boom finished, yet our GST distribution remained cripplingly low. This is a national issue. Every member in this chamber should heed the advice of the Productivity Commission. This is an independent report. It's been compiled by an authority looking at the best interests of Australia, not just one particular state.

I just can't understand the behaviour of our friends on the other side of this chamber. The Leader of the Opposition, who is so vocal about the GST whenever he visits WA, offers nothing but an unfunded top-up payment that I have no doubt will come out of infrastructure funding that would have come to WA anyway. The Leader of the Opposition doesn't have the stomach to discuss national GST reform with the other states, so how would he pay for this? Just last month, we saw the new state Labor government attempt to increase gold royalties to pay for election promises. If the Labor Party's plan is to find more tax revenue to pay for unfunded promises, it will be catastrophic for the national economy. The member for Burt, who was shouting at me across the floor last week, told The West Australian on 11 October that we need an urgent remedy 'such as Labor's 70c floor commitment'. Member for Burt, do yourself a favour and go and have a read of the report. You don't even have to read that much of it; just go to page 20. The report says:

… the introduction of a relativity floor is unlikely to provide a holistic fix to the various complexity and efficiency concerns identified earlier, and may even increase uncertainty and unpredictability. A floor is targeting a symptom, and ultimately, prevention is better than cure.

The member for Perth—and I wish him all the joy with his new baby—told the same newspaper on the same day that the issue facing WA was just a 'blip on the radar'. When you get back to work, Member for Perth, you're going to have to do a little bit better than that. Member for Perth, you might want to pick up a copy of the report too. It says:

Equalising comprehensively and to the fiscally strongest State means that the redistribution task is too great for any jurisdiction to bear; and is volatile at times of significant cyclical and structural change.

There is scope for it to discourage desirable mineral and energy resources policies … and State policy for major tax reform …

With the Labor Party's contempt for the mining industry, it's no wonder they're not motivated to take action.

We have an opportunity to strengthen the national economy if we do this the right way. If we reform the system and improve the way our economy operates as a whole, then every Australian will be better off. The notion that the Grants Commission used the GST formula to raise every state to equivalence with the best-performing state is damaging our national economy. I call on the opposition to provide bipartisan support for real GST reform for the good of the nation, and especially my home state of WA. (Time expired)

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