David Feeney (Victoria, Australian Labor Party) Share this | Hansard source

It is also my pleasure to rise this afternoon in support of the Federal Financial Relations Bill 2009 and the Federal Financial Relations (Consequential Amendments and Transitional Provisions) Bill 2009. The Federal Financial Relations Bill 2009 is not one of those bills which is likely to gain enormous press coverage or indeed the forensic and excited analysis of our newspapers. But, notwithstanding that dreadful oversight, this is in fact a very important piece of legislation indeed. The Federal Financial Relations Bill 2009 is a bill that essentially keeps faith with Labor’s commitment to work hand in hand with our states and territories to end the blame game and to give legislative reality to the new architecture of the relationship between the Commonwealth government and the state and territory governments.

The bill appropriates funds to provide financial assistance to the states and implements this government’s reforms to modernise federal financial relations in accordance with the new financial framework agreed at the COAG in the Intergovernmental Agreement on Federal Financial Relations. On 29 November 2008 the Council of Australian Governments agreed to this new framework for federal financial relations. I might say that that it is matter of great pride to this government as well as those governments at COAG who welcomed and agreed to this important reform. It is a reform which provides a robust foundation for collaboration on policy development and service delivery—those two crucial ingredients—and facilitates the implementation of economic and social reforms in areas of national importance.

In agreeing to the new framework for federal financial relations, the Commonwealth committed to the provision of ongoing financial support for the states’ service delivery efforts and to do that in three particular ways. The first of those is general revenue assistance—that is, the ongoing provision of GST payments to be used by the states for any purpose. The second is the national specific purpose payments, the SPPs as they are known, which are to be spent in the key service delivery sectors. The third is the national partnership payments to support the delivery of specified outputs or projects to facilitate particular reforms or to reward those jurisdictions that have delivered on nationally significant reforms. The new federal financial framework commenced on 1 January 2009, with transitional arrangements for the period to 30 June 2009.

I want to say some brief words about each of the three particular parts of the framework, beginning with GST payments. The bills provide an appropriation for the Commonwealth to make GST payments to the states equivalent to the revenue received from the GST in respect of financial years starting from 1 July 2009 and for these payments to be distributed in accordance with the principle of horizontal fiscal equalisation. That is a phrase which, as the previous speaker warned all of us, is an intimidating one, but it is nonetheless a critical principle for how the GST is distributed between the Commonwealth and state and territory governments.

Each state will receive its adjusted population share of the GST revenue. The adjusted population for each state will be calculated by multiplying the state’s population as determined by the Australian Statistician by a GST revenue-sharing relativity as determined by the minister. That, of course, is a formula which, from time to time, becomes very prominent in Australian politics as a source of disputation and rhetoric between the states and the Commonwealth but in fact, of course, is something that has had a longstanding importance in Commonwealth-state relations.

These provisions are equivalent to the current GST payment provisions in the A New Tax System (Commonwealth-State Financial Arrangements) Act 1999. So it is important to note that there has been no disadvantage bestowed on any of the jurisdictions through these arrangements. The bills provide for the repeal of parts of A New Tax System (Commonwealth-State Financial Arrangements) Act 1999 with effect from 1 July 2009 and for the act to be renamed A New Tax System (Managing the GST Rate and Base) Act 1999. This, of course, is housekeeping but it makes sure that those pieces of legislation are clearer to legislators and citizens alike in terms of their function.

Going to the second mechanism for payments here—the national specific purpose payments—the bills provide for an appropriation by the Commonwealth to make an ongoing financial contribution from 1 January 2009 to support state service delivery in the critical areas of health care, with those payments commencing with effect from 1 July 2009; schools; skills and workforce development; disability services; and, lastly, affordable housing.

Turning to the national partnership payments and general purpose financial assistance, the bills provide for the minister to credit amounts to the COAG Reform Fund for the purpose of providing financial assistance to the states in the form of a national partnership payment and general purpose financial assistance. While the annual appropriation acts will not appropriate amounts to be paid as national partnership payments and general purpose financial assistance, the maximum amount that the minister may credit to the COAG Reform Fund in a particular financial year will be specified in an annual appropriation act related to that particular year. The COAG Reform Fund will be used to disburse national partnership payments and general purpose financial assistance to the states, and it will do that under the new federal financial framework.

I think it is important to relate to the Senate that these bills, needless to say, have a very significant financial impact. Senator Coonan has outlined that financial impact in her remarks. Very briefly, we are talking here about a funding package agreed by COAG with additional appropriations totalling some $6.3 billion over five years—those five years, of course, being 2008-09 through to 2012-13. What these bills in fact do is provide reality to the government’s commitment—the commitment made in 2007—that we would give new form to our federal-state relations, and that new form would keep faith with our commitment that our relationship with the states would not be a relationship marked by conflict or overbearing conduct between one set of lawmakers and another but rather would be marked by cooperation and a search for common solutions to common problems.

During the 2007 election campaign Kevin Rudd committed a Labor government to a new approach to federal-state relations—what he termed ‘ending the blame game’. Of course, he was referring to the way federal-state relations were conducted under the Howard government—a government made up of parties that were all historically committed to the concept of states’ rights. It is somewhat ironic when one considers the record of the Howard government. The Liberals came to power committed to something called ‘new federalism’ but instead what Australians received over 11 years was a new centralism. John Howard embraced centralism with an enthusiasm that put all of his forebears to shame. Under Mr Howard, everything was to be decided in Canberra—in fact, everything was to be decided by him. I recall in that marvellous ABC series The Howard Years the then Treasurer, Peter Costello, regaling the audience with tales of how in fact he himself was not aware the Prime Minister was about to announce the GST. So centralism had reached the point under John Howard where not only all decisions were being made in Canberra but indeed all decisions were being made by him without regard to cabinet. Schools, universities health funding, transport, wages and conditions, the environment, Indigenous affairs—John Howard knew best about everything and the states could take what was offered to them or they would go without.

As the states, one by one, elected Labor governments over the course of those 11 years, you will recall, Acting Deputy President Troeth, that the Prime Minister increasingly treated these states of the Australian Commonwealth as enemies and as political punching bags at election time. Mr Howard took the credit for everything good that happened but of course blamed the states for everything bad that happened. This reached the heights of absurdity during the election campaign in 2007, by which time Australia had six state Labor governments and two Labor territory governments. Mr Howard campaigned as if those the states were hostile foreign powers. Despite the fact that Mr Howard had been Prime Minister for 11 years and despite the fact that he had centralised virtually all important decisions into his own office, suddenly he was now not responsible for anything. No, it was all the fault of the states. If the states borrowed for vital infrastructure projects, as the states have always done, they were reckless spenders and responsible for our national debt. Yet if they did not borrow moneys for vital infrastructure projects, they were responsible for whatever went wrong with every road, bridge, port, airport, pipe and hole in the ground. What Saddam Hussein and the hapless refugees on the Tampa did for John Howard in earlier elections, he hoped the states might do for him in 2007. Of course, that is all a matter of history now, and we all know how that story ended. All that blaming and shifting of responsibility between the Commonwealth and the states was in vain. When Victorians were asked to choose between the record of the Bracks-Brumby state Labor governments and the record of John Howard, I am delighted to report that they chose to reject Mr Howard. Of course, that story was repeated outside Victoria and throughout Australia.

Mr Howard’s blame the states campaign fell as flat as his scare campaign about union bosses. Faced with the choice between Mr Howard’s scaremongering and blame shifting and Kevin Rudd’s positive, constructive, concrete proposals for fixing our federal system and getting federal-state relations back on a constructive and cooperative footing—the kind of footing that those relations enjoyed under the Hawke and Keating governments—the voters rejected Mr Howard and supported Kevin Rudd. This bill is the realisation of Kevin Rudd’s campaign promise to end the blame game and to fix the problem, whereas Mr Howard had core and non-core promises—those promises he intended to honour and those promises he did not intend to honour, that he intended to discard. Kevin Rudd has come to office as a Prime Minister determined to keep all of his commitments that he made to the Australian people. This bill is another example of that determination.

That is why, as I said at the outset, this is not a bill that we will see splashed across the pages of the Herald Sun tomorrow, it is not a bill that will attract great public controversy, but it is a bill of very enormous importance. It is a bill that gives flesh to the very important agreement reached at COAG, the very important changed arrangements between the Commonwealth government and COAG, and I guess one might say a new approach whereby the Prime Minister and the Treasurer will not have annual slugfests with state governments about how moneys are to be disbursed; rather, there will be the capacity for long-term planning against real and rational targets.

The Treasurer in his second reading speech in the House of Representatives made the point:

In the past, onerous Commonwealth conditions on funding arrangements have tended to stifle innovation and flexibility, resulting in duplication, overlap, cost shifting and unnecessary administration costs.

We not only have the issue of relations between state and federal governments being previously marked by the bitter politics and blame shifting that occurred but also have some important principles of public policy that we must keep in mind here too. Those important matters of public policy are about how those previous arrangements operated to stifle the kind of innovation and evolution in public policy that was so very necessary.

Having made the claim that this is a very important piece of legislation and having made the claim that this is a bill that gives truth and reality to Labor’s commitment to end the blame game and work cooperatively between the different tiers of government, you might very well ask the questions, ‘How is the opposition considering these important matters? How has this bill figured in the thinking of those on the other side?’ We had the example of that yesterday in the House of Representatives. This matter came before the House yesterday afternoon—to be forensic, at 12.46 pm—and I can assure you that on that occasion the Treasurer and the Labor government were listening with bated breath for how the opposition was going to consider the important questions here. The answer, I am afraid to report, is that the opposition in the House proved itself, yet again, to be incapable of coming to grips with significant questions of public policy. We discovered yesterday in the House that Joe Hockey, the shadow Treasurer, was unable to be found. Mr Abbott manfully stepped into the breach and for three minutes did his level best to try to articulate an opposition position on this very important bill. Over those three manful minutes, Mr Abbott did his very best to try to present the opposition as a force in Australian politics—not an easy task. Over those three minutes he said a few words, and some of them have caught my eye. He said:

That is why a significant number of frontbenchers from the opposition will be forensically analysing the legislation in the course of this debate. I have had great pleasure in trying to at least contextualise the position of the opposition in the debate that we now intend to proceed with.

A fine and upstanding set of words. I guess none of us are going to pontificate about occasionally being sent into the breach to speak about matters that perhaps do not sit at the heart of our political activism. But what we have there is Tony Abbott desperately covering, as best he may, for an absent shadow Treasurer and promising us forensic analysis. Well, CSI Abbott was completely unable to make any comments of any weight about this very important legislation. I guess that just brings into sharp resonance for all of us the fact that when there are significant issues of substance going through the legislative process in this country what we have right now is an opposition that is completely unable to come to terms with it.

Unfortunately, the afterglow of Tony Abbott’s manful efforts in the lower house found a bit of an echo here earlier today when the Senator Coonan, in trying to give some substance to the opposition’s response to this bill, made the point that she was ‘watching and monitoring’ how this bill would operate and said ‘let’s see how it goes’. Let us see how state and Commonwealth relations go—that is not the sort of laissez-faire attitude that has marked the approach of those of us on this side. That is not the kind of let it rip, see how it goes attitude that would of course be proper for a Treasurer or for a government that is completely resolved to bring new shape and new maturity to state and federal relations. But it is the kind of attitude, unfortunately, which marks the Turnbull three-step—