Peter Georgiou (WA, Pauline Hanson's One Nation Party) Share this | Hansard source

I've been a passionate advocate for GST reform. I am pleased that the government has finally listened to my calls on behalf of all Western Australians for a fairer slice of the GST pie. This bill is long overdue and will finally make an attempt to correct some of the wrongs of the horizontal fiscal equalisation and its effect on successful economies like that of Western Australia. The extra money will allow the state government to fund schools, hospitals, road upgrades and other infrastructure as needed and hopefully pay down some of our huge debt in Western Australia. It is clear from the Productivity Commission report that Western Australia generated more state sourced revenue than any other state and, as a result, has been penalised for its achievements over the last decade.

Horizontal fiscal equalisation provides a disincentive that spins off in relation to the approval and exploitation of mineral resources located within states and territories. This is the main problem here in WA. Under the existing system, the vast bulk of the additional royalties associated with new mining developments leaks to other states and territories within two or three years. Under the current system, Australian states do not need to strengthen their own natural-resource industries because they know they can sit back and wait for GST redistribution to equalise their capacity every year. If New South Wales and Victoria developed their offshore-gas sectors, they could create billion-dollar industries and inject millions into their own state government revenues. Under the current unfair system, we have effectively removed the incentive for states to develop all their resource industries, and the nation as a whole suffers.

The key question is: why would a state or territory take all the political heat associated with facilitating new mines only to have most of the additional royalty income shared with other states and territories that have not had to face similar political problems? Another critical question I'm asking is this: how is it possible that the revenue from gambling taxes is not included in the GST distribution formula? Western Australia's decision to limit pokie machines means the state has relatively little gambling tax revenue but is penalised for this in the distribution of GST.

The thing about the GST distribution is that it's a win/lose scenario. Giving more to WA must involve giving less to other states, particularly those that are typically overfunded—South Australia and Tasmania, in particular. It's time to get real. Instead of trying to keep everyone happy, the government should announce that the distribution of GST will move to a per capita basis over a five-year time frame, for instance, and in the short term those states that lose out would be partly compensated.

When it comes to the principal of HFE, all citizens should have access to similar services. The federal government should make this happen with specific grants to the states and territories. This would add accountability to the system. The way the GST is currently distributed completely lacks accountability. At the same time, I'm concerned that the government will be dipping into its own coffers to the tune of billions of dollars to ensure no state is worse off. The Treasurer said that all states would be better off with the Commonwealth injecting an additional $9 billion over 10 years to 2028-29. The states of South Australia and Tasmania and also the Northern Territory should suck it up. They've had it too good for too long at the expense of other states. They may even lift their game as a result.

In reality, the Commonwealth is doing the minimum as a step towards genuine GST reform. This bill is not perfect. There are still other issues that need to be changed as well. It will take about 10 years to reach full implementation. The date of effect for the updated HFE system, along with a boost to the GST revenue pool, is transitioned into effect from 2021-22, with the new arrangements applying in full from 2026-27. The GST floor is introduced in two stages, with an initial floor introduced for 2022-23 and then raised for 2024-25. The short-term transitional payments apply for three financial years, starting in 2019-20. The Productivity Commission inquiry is to be completed before 31 December 2026. Given what I mention here, I remain unconvinced about the government's desire or intent to pay off the nation's rapidly rising debt and I have concerns about its budgetary and fiscal management skills. I will be supporting this bill despite its many failings for a long-term solution. At least it's a small step in the right direction.