Madeleine King (Brand, Australian Labor Party, Shadow Minister for Consumer Affairs) Share this | Hansard source

I'm very pleased to rise today to speak on the Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Bill 2018, which has quite a natty title for a very important situation. This bill has been a long time coming, there is no doubt about it. Western Australians, myself included, have long been calling for a change to the GST distribution system. While Western Australians wholeheartedly welcome this legislation, we haven't forgotten how we ended up here and who has been standing in their corner in the years leading up to this change.

If we revisit the recent history of GST distribution and the events leading to Western Australia's dire financial situation at the end of the mining and construction boom, we see that the Labor Party has always been on the side of Western Australians, while successive Liberal governments have clearly left them in the lurch. It should be noted I think that the GST has not always been a point of contention in WA. It became an issue for two main reasons. The first was that WA began facing the lowest GST relativities in the GST's 20-year history at a time when our economic fortunes were reversing due to the three-year assessment period in the GST, the two-year lag in the system and the incredible and somewhat regrettable, but inevitable, volatility of Western Australia's main sources of revenue—minerals and resources royalties. This legislation will go a significant way towards addressing this issue. Labor supports the legislation, but only because of the recent backflips of this government.

Secondly, and more notably, GST distribution became a very serious problem for my state when the people of Western Australia were subjected to the irresponsible economic policies and actions of the Barnett Liberal state government in WA. Make no mistake, it is the Liberal Party in WA that has a track record of uncontrolled spending and budget mismanagement. According to the International Monetary Fund, the Howard-Costello government was the most profligate federal government in Australia in the last 50 years. As the mining boom was gathering pace they cut taxes so far and so fast they forced the Reserve Bank of Australia to rapidly increase interest rates. Then, walking in the footsteps of their predecessors, were the Barnett Liberal-National government in WA with treasurers Troy Buswell and Christian Porter, who managed to completely waste the biggest construction and mining boom in Australia's history. Under the Barnett Liberal-National government, WA finances crumbled, and there is absolutely no doubt that for his actions one former Western Australian Treasurer in particular, the current Attorney-General and current member for Pearce, Mr Porter, has to shoulder a great deal of the blame for the fiscal mess Western Australia found itself in. Over the first term of the Barnett-Porter government expenses grew 33.2 per cent, with no care for how the expected and utterly predictable changes in GST distribution would impact the budget bottom line in WA.

During the height of the mining construction boom WA was receiving very high GST payments. At the same time, we were in the great position of being able to reap billions of dollars in mining royalties. This was because of the lag in the GST system. The Productivity Commission found that during this period WA raked in $7 billion more in GST payments than it would have if GST calculations had been made on a same-year basis. Even though the state government was warned by the WA Treasury that its fortunes would quickly reverse and WA's GST relativities would inevitably fall, Premier Barnett and Treasurer Porter decided to behave like that friend who's a little bit bad with his cash, and instead of acting like a Premier and a Treasurer they kept spending, plunging the state into fiscal disrepair. The former Treasurer of Western Australia and now Attorney-General of this country is not an idiot, that is for sure and for certain. He and former Premier Barnett knew how the GST system worked. They should have and could have planned for it. The Attorney-General is not an idiot, but he is irresponsible. This situation was utterly predictable, because we all knew how the GST system worked. I wouldn't say it is a great system, and I'm glad we're fixing it. The lag was there. Increasing mining royalties increased our GST take, which then inevitably brought our GST down to bring us into a relativity with the other states and to ensure the operation of horizontal fiscal equalisation.

Instead of using discipline and foresight to manage the budget, the now Attorney-General, then Treasurer of WA, was hedging bets on there being a change in GST legislation and policy. Those bets were used to bankroll some pretty crazy Liberal spending habits. In his 2011-12 budget speech, the WA Treasurer and now Attorney-General made this reckless prediction:

What we reasonably anticipate is that in 2013–14 the CGC will have brought in a new GST system. We expect it will produce a floor of about 75 per cent of our population share of the GST. Therefore we expect extra revenue of $1.8billion in 2013–14 and $2.5billion in 2014–15.

The government of WA banked this money, which was in no way confirmed or even hinted at, and they kept spending with the idea: 'We expect some money to arrive in future, which will be able to go to reducing existing debt.' As we all know—and now are living with—those changes to the GST distribution system did not happen and the fiscal decisions of the Attorney-General, then state Treasurer of Western Australia, Christian Porter, left the Western Australian state budget in utter disarray.

In 2007-08, Western Australia had an operating surplus of $2.6 billion and a total public sector net debt of just $3.6 billion. Nine years later, after two terms of a Liberal-National WA government, the state had an operating deficit of $3 billion and a total public sector net debt of $32.5 billion. While one of the Barnett Liberal-National government's favourite pastimes was to blame the GST for their fiscal problems, they were the ones to blame, fairly and squarely, for WA's enormous budget deficits. It's not just me who thinks this; this economic assessment of the Barnett Liberal-National government is supported by some fairly important people in Western Australia and around the country.

The Productivity Commission's report into horizontal fiscal equalisation explicitly states that, while Western Australia's GST experience has been unprecedented, it was 'exacerbated by earlier budget decisions of the WA government'—quite an understatement. The 2018 Special Inquiry into Government Programs and Projects in Western Australia, carried out by respected WA leader and businessman, John Langoulant, similarly stated that if the Barnet government had heeded the WA Treasury's warnings about unchecked spending and the expected and, as I said earlier, utterly predictable drops in WA's GST 'it is highly likely that the state's current budget and debt positions would have been mitigated, and in a material manner.' Always understated, John Langoulant, but he does get to the truth. Even renowned Australian economist Saul Eslake has come out and said:

WA's present fiscal woes are the result not of a flawed system of distributing revenue from the GST among the States and Territories, but rather of its inability to control its own spending.

After two terms of a Liberal state government failing to manage spending, net debt increased by an incredible 500 per cent and Western Australia had its credit rating down-graded—the first time it had been downgraded in WA in 15 years; and this after the biggest mining and construction boom this country has ever seen.

At the end of nearly a decade of the Barnett Liberal-National WA government, Western Australia, who had just gone through the largest mining boom in Australia's history, had the equal lowest Moody's rating of all the states and the second-lowest rating for Standard & Poor's. The reality is that Liberal governments around this country have a track record for unchecked, destructive spending habits. What this legislation really is is a chance for the Prime Minister Party to mop up the tens-of-billions-of-dollars hole one of the members of his current cabinet left in Western Australia.

The Labor Party in opposition watched this budget disaster unfold in Western Australia, and we have been backing changes to the GST to protect Western Australians from suffering further at the hands of the Liberal government's continuing economic mismanagement. The Labor Party, both state and federal, has been leading the charge on GST the whole way, and this legislation is in no small part due to our efforts to always speak on behalf of Western Australians. At the end of August, last year, the Leader of the Opposition, Bill Shorten, announced our Fair Share for WA Fund, committing $1.6 billion for Western Australia, bringing their share of the GST up to 70 per cent.

At the time, the government roundly criticised us for this top-up method. The Treasurer at the time, now the Prime Minister, said that 'top-ups forever is a mugs game', but he didn't offer any alternative solution to fix the GST imbalance. The then Treasurer—now maybe the last Prime Minister in a long line of Prime Ministers under the current government—didn't really care about helping Western Australians. But now he is supporting this top-off. I wonder what he is now thinking about those statements.

In July, after the government released its interim response to the Productivity Commission's inquiry into the GST, the Leader of the Opposition, Bill Shorten, demanded the government 'make the floor the law', which would give Western Australians much-needed certainty and stability in the GST distribution. That demand was ridiculed by this government and the current Prime Minister, then Treasurer, said that there was no need to legislate the GST deal. So, again, we see the Prime Minister, then Treasurer, not really caring about protecting Western Australians. But now Liberal seats in WA and his job are at risk. Member for Tangney, I am not sure of your margin but, after the results in Wentworth, you might need to get out door-knocking a bit more, because we know the member for Pearce has to.

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