Michael Keenan (Stirling, Liberal Party) Share this | Link to this | Hansard source

I move:

That the House:

(1)

notes that:

(a)

as a result of the introduction of The New Tax System on 1 July 2000, every State and Territory will be better off in 2006-07 than they would have been had tax reform not been implemented;

(b)

since the introduction of the GST in 2000-01, Western Australia has received around $18.4 billion in GST revenue and is estimated to receive a further $3.9 billion in 2006-07;

(c)

the Western Australian Government has benefited the most from the mining boom among the States, collecting more revenue from royalties, including petroleum revenue from the North West Shelf, than any other State, and is expected to collect almost $1.9 billion in royalty revenue in 2005-06 and over $2.2 billion in 2006-07;

(d)

the Western Australian Government collected $2.36 billion in 2005-06—almost double what it collected three years earlier;

(e)

Western Australia is estimated to be the highest taxing State in Australia on a per capita basis in 2005-06 and is set to remain one of the highest over the forward years;

(f)

as part of the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations, the States were to abolish nine State taxes; and

(g)

the Western Australian Government has failed to implement this agreement and abolish all of these taxes; and

(2)

calls on the Western Australian Government to:

(a)

immediately abolish Mortgage Duty, Rental Duty and Non-real Conveyance Duty as agreed in the GST agreement;

(b)

take immediate steps to reduce the burden on home buyers by substantially decreasing Stamp Duty and associated land charges; and

(c)

reduce the overall tax burden on Western Australians from the highest in the nation.

Western Australia is in the grip of a once-in-a-lifetime economic boom. The demand for commodities from China and, to a lesser extent, India has fuelled a resources bonanza that has resulted in double-digit economic growth. This has resulted in a massive inflow of revenue to the Western Australian Labor government—through no doing of their own—on a number of fronts, including massively increased GST revenues, massively increased mining royalties and massively increased property transfer taxes.

You would expect that these massive increases in revenue would allow the Western Australian government the latitude to reduce the overall taxation burden on Western Australians; yet, sadly, the opposite has been the case. Instead of reducing taxes, the Western Australian government have become the highest taxing government in the nation. They are far and away the highest taxing government that Western Australia has ever seen. Their demand for revenue is obscene. When Labor came to power in 2001, the Liberal government was collecting $1,500 per person in state taxes. The Carpenter government, in contrast, collects $2½ thousand for every man, woman and child. This is a massive $1,000 extra per person. In an environment where property prices have increased 50 per cent in the last two years, the Western Australian government have increased the rate of stamp duty to be now one of the highest in the nation. Their stamp duty windfall is almost double what they budgeted for. They have also collected enormously increased mining royalties and enormously increased GST revenues—both far in excess of what was actually budgeted for.

This begs the question: where has all this money actually gone? Government propaganda would have you believe that it has been spent on infrastructure or on more essential services, but all Western Australians know this to be wrong. In my own electorate of Stirling, the state government fails to fund essential infrastructure such as much-needed overpasses for the Reid Highway. Anyone who visits a state school will see the neglect of the Western Australian government. It is up to the Commonwealth now to fund building works through our Investing in our Schools program. Indeed, it is very difficult to identify any area of administration that the Western Australian government is actually prepared to take responsibility for. Any problem, any request for action, is met with the same response—let the federal government do it. Yet the Carpenter government continues to spend like drunken sailors. It has exceeded its spending targets in every one of its five years in office. In the last financial year it increased spending by seven per cent above the allowance that had already been made for inflation and population growth.

The real answer to where all this money has gone is in more bureaucrats. We have a massively expanding public workforce in Western Australia. In fact, the government there employs 17 extra workers every single day—that is, a massive 86 extra workers every single week. Again, if this workforce increase were going to more police officers, more teachers or more nurses it might be defensible, but sadly these new workers are not employed in frontline services that deliver anything to the people of Western Australia. They are employed in creating more bloated bureaucracies for ministers—an extra 17 per cent increase in the workforce of the Department of Premier and Cabinet, an extra 11 per cent in the Department of Treasury and Finance. The record wages bill that this massively expanded public workforce has created will be a millstone around the neck of any successive Western Australian government.

The Western Australian government must take urgent steps to reform their gluttonous taxation policies. They can start by adhering to the original GST agreement and immediately abolish mortgage duty, rental duty or non-real conveyancing duty. They must stop their great rip-off through property taxes, reduce the rate of stamp duty and provide some relief for first home buyers. There is absolutely no justification for Western Australia to have the highest stamp duty rates in the nation. This mismanagement cannot continue. Once the boom ends, WA will be left with an uncompetitive tax regime— (Time expired)

David Hawker (Speaker) Share this | Link to this | Hansard source

Is the motion seconded?

Stuart Henry (Hasluck, Liberal Party) Share this | Link to this | Hansard source

I second the motion.

Bob McMullan (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

There is no doubt you have to have a special sort of nerve, a particular level of temerity, to come in here as a representative of the Howard government and complain about the level of taxation, because you are a representative of what is now universally accepted as the highest taxing government in Australia’s history. I first made that claim some four or five years ago and it was disputed. We had a debate for about six months as to whether it was correct or not depending upon certain definitional issues. But that debate is over. Everybody knows that the Howard government is the highest taxing government in Australian history.

An Australian Bureau of Statistics survey recently released found that the Commonwealth government take $223 billion in tax. That is the tax problem facing Australians—not the minor issues that the member for Stirling is seeking to divert attention with—a record high 25 per cent of Australia’s GDP. You would expect that a conservative government would argue that you should lower the level of income tax. That is why they introduced this great big, swingeing, new indirect tax—to give people more say over how they spend their money. But, if you exclude the GST, their tax take is going up more and more every year. The double tax slug of more income tax and more indirect taxes, like the GST, is costing Australian taxpayers on average $77 a week. Even after you take into account the tax cuts, the federal government will still pocket an extra $29 billion in increased tax revenue over the next four years.

Ask Australian families what the tax is that is affecting their capacity to, amongst other things, save to buy a house and to pay the mortgage when interest rates are going up, notwithstanding promises to the contrary. They will say it is two things: income tax and the GST. Those are the two things that are hurting Australian families. It is typical of the Howard government that they send people in here to talk about somebody else’s problem in the hope that it will divert attention from their own. The way the income tax burden is falling more and more on middle Australia and reducing their ability to pay their housing costs is much more important.

Let us have a look at the question of the housing market. In Western Australia the housing market is still booming, unlike elsewhere in Australia, and that is essentially a product of supply and demand for housing. It is putting up the price of houses. What is the biggest factor affecting the capacity of families to buy houses? Interest rates. Why are interest rates going up? There is a complex array of factors but every economist will say the problem is that fiscal policy is expansionary in conflict with tight monetary policy and therefore, as ANZ Chief Economist Saul Eslake predicted again recently, it is likely there will be at least one more interest rate increase before the middle of next year.

We had the promise to keep interest rates at record lows. If it had been kept, every Australian family that is paying off a mortgage or trying to buy a house would be incomparably better off than they would be if they were affected by any minor change in state taxes. The big tax grab is going on at the Commonwealth level. The big pressure on the capacity of families to buy houses is going on at the Commonwealth level. That is exacerbated on the supply side by the failure of the Commonwealth to maintain its commitment to supply low-income housing under the Commonwealth-State Housing Agreement. That is where the Commonwealth has a direct impact on the balance between supply and demand for housing.

The latest table I have seen from the Productivity Commission shows that, once you exclude two years of increase for GST compensation, you have had continuing falls in the real value in 2004-05 dollars of Commonwealth-state housing assistance to the states for housing for people in greatest need. I understand there are a lot of people in Stirling who would be a bit more concerned about that than they would be about the issues that the member is raising.

Everybody would like every tax to be lower. We all know that in paying taxes we use dollars we could use for other things in our lives. The biggest slugs on families are the enormous, rapacious, record increases in tax revenue by the Howard-Costello government. Peter Costello is the highest taxing Treasurer in Australian history by a country mile, taking 25 per cent of GDP. No Australian Treasurer has ever taken 25 per cent of GDP in taxes before—none. He is the highest taxing in history. (Time expired)

Stuart Henry (Hasluck, Liberal Party) Share this | Link to this | Hansard source

I take pleasure in seconding the motion today and speaking in favour of it. It was certainly interesting to hear the member for Fraser talk about having a special nerve in raising tax issues. There is no doubt the Howard government has introduced a funding mechanism to ensure that states do have revenue to support their recurrent expenditure through the GST arrangements, yet we still see the state government in Western Australia, with the highest taxing state treasurer ever, increase their tax take—by only $5.2 billion! That is a record in the history of Western Australia.

Are they spending more on schools? Are they spending more on road infrastructure in an appropriate and effective way? No. It is the Howard government, through its Investing in Our Schools program, that is ensuring schools have appropriate toilet blocks, playground equipment, and computer suites and systems so that our kids can be educated in the technology that they so urgently need to be. The Howard government’s Roads to Recovery and black spot funding are supplementing what the state governments should be doing to ensure a reduction in accidents, particularly on Western Australian roads.

It was very interesting to note a headline on 28 September by the Chief Reporter of the West Australian: ‘I’ve creamed an extra $1b in stamp duty’. It is a disgrace. An extra $1 billion in stamp duty actually limits the ability of people in the electorate of Hasluck from getting into housing in the new housing areas through Forrestfield, High Wycombe, Maida Vale, Wattle Grove and Gosnells. According to Mr Rossen from the Real Estate Institute of Western Australia, home buyers in 2001 paid $4,720 in stamp duty on a median priced home; in 2006, they are paying $16,580 on a median priced home. Last week in the state parliament, the opposition proposed that the state government lift the exemption on stamp duty for first home buyers to the median price of $420,000. The impact that this would have on revenues is a mere $50 million. Compare that to the $970-odd million that the state government reaped this year in additional stamp duty on housing. It is time that the Western Australian state government actually got itself together.

Both the Premier and the highest-taxing Treasurer, the state member for Belmont, the Hon. Eric Ripper, have recently issued bold statements about their commitment to record infrastructure programs. Their commitment to record infrastructure programs extends to some 14,500-odd new public servants who are not teachers, nurses or policemen. Where they are, who knows? But there have been 14,000-odd additional public servants since the state Labor government came to power in 2001. That is where they are spending a lot of this surplus. Furthermore, the other infrastructure program—the one that we all know about, the Perth-Mandurah railway line—blows out by another $50-odd million every time it is mentioned by the Minister for Infrastructure and Planning. I would suggest that, since that project was first announced, the costs have gone up substantially. Where do those costs and increases—probably in excess of $100-odd million since this project got underway—go? They go to support their union mates who are out on strike, off on picnic days and doing everything other than ensuring that they meet the time frames for the development of this particular infrastructure project.

I ask you, Mr Deputy Speaker: where are these infrastructure programs? All we hear from the Minister for Infrastructure and Planning over there is dithering and delays about the Perth-Bunbury highway. That is supposed to be an important strategic road for which the Commonwealth government has provided substantial funding. The way things are going, they will lose another $20 million from that because it is not meeting the time. (Time expired)

Kim Wilkie (Swan, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on this matter and to give an accurate view of the Western Australian fiscal position, as opposed to the fairytales put forward by the members opposite. In my view, the members for Stirling and Hasluck have misrepresented the situation. So let us get down to a few facts.

In dollar terms, Western Australia provides the highest subsidy to other states of any state or territory. The subsidy provided by Western Australia has grown strongly since the mid-1980s. This reflects the strong growth in Western Australia’s economy, which has boosted the Commonwealth tax collections from the state. Our subsidy amount to the other states is around $2,000 for every man, woman and child. But, as a result of the strong performance of our economy, our share of Commonwealth grants is likely to fall by about $700 million from where it would otherwise be by the time we get to 2009-10. We get extra revenue as a result of our economic performance, but then the Grants Commission says, ‘You’ve got more revenue raising capacity so we’re going to reduce your share of Commonwealth grants.’

Meanwhile, the Commonwealth raises much more revenue than it could possibly ever require for its own responsibilities. Not only does the Commonwealth raise much more money than it needs, but also it raises much more money from Western Australia than it spends in our great state. The Commonwealth collects $28 billion from Western Australia, but it only spends $24 billion in WA; that is $4 billion taken away and spent in other states. To their credit, New South Wales and Victoria also subsidise the rest of the country, but ours—$2,000 per Western Australian per year—is the largest per capita subsidy. My view is that a portion of that $4 billion should be spent by the Commonwealth directly on infrastructure—for example, upgrading the Great Eastern Highway between Orrong Road and Perth airport, which many of us know so well.

The recent federal tax cuts were really based on the sterling performance of the WA resources sector. Mr Deputy Speaker Haase, I am sure you would be aware of that. The Commonwealth has reaped enormous revenue from company and income taxes generated by the resources boom. Our subsidy to the rest of the nation is growing. Twenty years ago, there was a slight subsidy to Western Australia. In the 20 years since 1986, the subsidy Western Australia provides has grown to $4 billion per annum and, given the performance of our economy, we can expect that subsidy to quickly grow to $5 billion and beyond.

Michael Keenan (Stirling, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. The member for Swan refuses to even refer to the terms of the motion that I have moved, as set out in the Notice Paper. I thought that the member for Swan might make a token effort to at least defend his Labor mates. I would ask you to ask him to return to the substance of the motion.

Barry Haase (Kalgoorlie, Liberal Party) Share this | Link to this | Hansard source

The member for Swan is in fact speaking to a motion that I have as ‘Western Australia and Taxes’. The speaker is in order.

Kim Wilkie (Swan, Australian Labor Party) Share this | Link to this | Hansard source

Some people just do not know what taxes are. Another problem is that a large amount of the money that is received from the Commonwealth is in the form of tied grants. These reduce our budget flexibility, distort resource allocations and result in increased intrusion by the Commonwealth ministers in areas of state responsibility. That is one problem. The second is this myth about the GST bonanza that the member opposite was ranting on about earlier. It is a myth. In 2006-07, WA expects to receive only $59 million more than under the pre-GST arrangement. Do not believe it when the Commonwealth ministers try and pass responsibilities to the states on the basis of the alleged GST bonanza. We need a sensible debate and a well-balanced treatment of Western Australia—one which would treat us fairly and would see members opposite stop playing politics with this issue and start standing up in this place for the rights of every Western Australian.

Let us have some fair and balanced debate here. Let us have some fairness for Western Australia. Let us have some money from the Commonwealth to pay for much-needed infrastructure resources, such as road and rail. Let us have the federal government stop bleating and whingeing about the Western Australian government and start fulfilling their obligations in this place to those people whom they represent—because they are the ones who need that infrastructure money. It is high time that the Commonwealth government got off their backsides and defended Western Australia.

Mal Washer (Moore, Liberal Party) Share this | Link to this | Hansard source

I was delighted to hear my good friend the member for Swan speaking about fiscal equalisation. I agree with you, Member for Swan, that we should get more in Western Australia. However, Western Australia is still the highest taxing state in Australia. In fact, it reaped a record $5.2 billion in tax in the last financial year. The Western Australian government has also benefited from the most incredible mining boom, collecting more revenue from royalties than any other state. In the last financial year it reaped around $1.8 billion, and it is expected to receive around $2.2 billion this year.

Since the introduction of the GST in 2000-01, Western Australia has received around $18.4 billion in GST revenue, and it is estimated to receive a further $3.9 billion this year. With other Australian government payments, the Western Australian state government will receive an estimated $7.4 billion, an increase of five per cent compared to the last financial year. In spite of all this revenue and the Western Australian Labor government’s fat $2.26 billion budget surplus, there is no immediate tax relief being offered. There are three areas of taxation where immediate tax relief is needed: payroll tax; stamp duty on property and cars; and mortgage duty, rental duty and non-real conveyance duty, which should be abolished immediately, as agreed to in the GST agreement.

Payroll tax receipts in the last financial year soared by $113 million to $1.35 billion. Our low levels of unemployment have seen an increase in demand for skilled tradespeople. Many businesses in Western Australia have found that they have needed to increase their rates of pay to attract and retain skilled employees. This has added considerably to the payroll tax burden for these businesses.

Property related stamp duty increased from the previous year by a whopping $682 million to $2.1 billion. Western Australia’s booming property market has seen the median house price rise to $420,000, which attracts $16,700 in stamp duty. In 2001, when Labor came into power, Western Australian homebuyers were paying $4,720 in stamp duty for a median priced home. The tax-free threshold for first home buyers needs to be increased from $250,000 to at least $400,000. The cost of this would be around $45 million. This could even be funded from the $150 million in annual interest being saved after using surpluses to reduce state debt.

Stamp duty on cars also needs to be reviewed. Motor vehicle taxes rose by $94 million to $736 million. Most businesses purchasing cars in Western Australia buy vehicles which cost more than $30,000, which means they are subject to the highest stamp duty rates in Australia. This means that the cost of doing business in Western Australia, particularly for large fleet customers, can be extremely high and can make them uncompetitive with the eastern states. It also needs to be considered that in the rental vehicle business the cost of stamp duty in Western Australia is being passed on to customers. In a state where many tourist destinations rely on rental vehicles, this must have some effect on our tourist industry.

Western Australia is considerably better off due to the federal government’s tax reforms. Every Australian knew the GST was introduced to replace a range of inefficient state taxes, and clearly Western Australia is in a position to remove those taxes. Western Australia has made little progress, with the abolition of a few stamp duties that represent only five per cent of its stamp duty revenue. The Western Australian government needs to immediately abolish the remaining stamp duties that were agreed to be abolished in the GST agreement—namely, mortgage duty, rental duty and non-real conveyance duty.

The Western Australian government must stop overtaxing Western Australians to build their own election war chest. They need to do what they were elected to do and refocus their thoughts on to helping small business owners and those who, under the current tax regime, can only dream of owning their own home.

John Murphy (Lowe, Australian Labor Party, Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

True to form, the Howard government is all too willing to criticise Labor state governments on Australia’s taxation quagmire while ignoring its own failure to address the underlying issues causing problems in our flawed fiscal system. It is a given that there is a serious imbalance between the states’ revenue raising powers and expenditure responsibilities. It is beyond doubt that the Howard government is taking away more money from the Australian taxpayer than any other government in our history, yet it all too happily points the finger at every other Australian government—this time the Western Australian government—in its usual exercise in cynical political opportunism.

What about its own contribution to the flaws in Australia’s taxation system? When one scratches the surface, it becomes apparent that the federal government is neck deep in responsibility for the hardship faced by the ordinary Australian taxpayer. The Treasurer has raked in tens of billions of dollars more each year in revenue since the Howard government came to office in 1996. When people pay their taxes, there is an expectation that they will obtain a return that is spent on hospitals, roads and schools in a manner that is rational and justified by statistical and economic analysis—yet the Howard government has continued to take funds away from the states and to reallocate them according to an anachronistic formula that not even the Grants Commission properly understands. Worse still, while all too willing to point the finger at the Western Australian government about the tax burden, the Howard government has failed to own up to taking billions of dollars out of that state and sitting on a healthy surplus until such time as it can pork-barrel marginal seats Australia wide in the run-up to the next election.

How does this address the tax burden being faced by Western Australians? While the Howard government raises billions of dollars, it is still failing to fulfil its basic service obligations. All the while, state governments have substantial line responsibilities but do not have their own revenue sources to fund these responsibilities. They are beholden to flawed fiscal transfers from the Howard government, which controls most of the notional tax base for the additional revenue needed to fund their responsibilities.

We are in this chamber today to discuss such things as Western Australia’s mortgage duty and rental duty. Why are we not discussing matters this government can control, such as the imbalance between expenditure on services, infrastructure and revenue provided to the states? Why are we not discussing the Howard government’s failure to address Australia’s severe skills shortage, which is undermining the ability of the states, including Western Australia, to continue their path towards sustained economic growth and prosperity?

Like never before, we are seeing increased cost-shifting towards the states while the Howard government remains in complete denial about the increasing levels of expenditure required. While the Howard government is willing to ride on the coat-tails of Western Australia’s economic growth, it has failed to recognise all of the costs that the Western Australian government has incurred in supporting this development. The Howard government has derived large company tax revenues from Western Australia’s strong resources sector, as well as rent taxes from oil and gas extraction off the state’s coast, yet it denies that Western Australia is bearing an onerous cost to support these resource developments.

Now the Howard government is failing in the one duty it does have, which is to provide the skilled workers to ensure that this resources boom—which it is taking for granted—continues. To move a motion in this House that is critical of the Western Australian government while ignoring the failure of the federal government on a wide variety of matters is breathtaking and hypocritical in the extreme. Never has a federal government put such a squeeze on the states and never has the future prosperity of this nation been placed under such threat by the wilful ignorance of a Commonwealth government. The member for Fraser pointed out again in this House today that this government is the highest taxing government since Federation.

All the while, Australian taxpayers are doing it tougher by paying huge levels of Commonwealth taxes while seeing services suffer because the money is either sitting in consolidated revenue waiting for a pork-barrelling session or being redirected according to an 80-year-old formula that should no longer carry much weight. Despite paying $13 billion in GST, residents in my home state of New South Wales are receiving only $10 billion back. That is $3 billion less in services and infrastructure than the people of New South Wales deserve.

We know the Howard government is sitting on huge surpluses. The Treasurer is sitting on money that belongs to the people of New South Wales; it is not his own. The dysfunctional nature of state-federal arrangements is putting each state under enormous pressure and is grossly unfair to the long-suffering taxpayer. The lack of leadership shown by the Treasurer and the Howard government on reforming Australia’s fiscal system is appalling. I condemn the motion. Parliament’s time would be better utilised in debating the government’s disgraceful media reform agenda, which is all about massively concentrating media ownership in Australia and handing over our democracy to Australia’s two biggest media companies, and that is a bloody disgrace.

Barry Haase (Kalgoorlie, Liberal Party) Share this | Link to this | Hansard source

Order! The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.