Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

It is a great pleasure to rise and make my first substantive contribution in the life of the 45th Parliament. And, while there will be an opportunity to do this more fully at a later time, I would at the outset like to thank the people of Western Australia for their support in returning me to this place.

Being a senator for Western Australia is something that I relish enormously, but I am always mindful of the fact that I would not be able to do it without the support of my fellow Western Australians and the support of the Western Australian Liberal Party in particular. So, on this first sitting day, I thank both for their faith in me and again pledge myself to the service of our great state and its people. Indeed, Madam Deputy President, I extend to you, a fellow Western Australian senator, my congratulations on the trust that has been extended to you here this afternoon in your elevation to the new role of Deputy President.

As I have said many times in this place, when it comes to Western Australia, there is no greater challenge and no issue more urgent than finding a resolution to the grossly unfair arrangements that currently exist for the distribution of GST revenue. I have also said before that Western Australians are not unreasonable or ungenerous people. We understand that the nation this parliament serves is a federation and we are a part of that federation. We all understand the need for Western Australia to make a contribution to the economic wellbeing of the nation as a whole. But what sticks in the craw of many of us is the sheer imbalance in the system, most particularly on the question of GST revenue, which has seen Western Australia's relativity fall from around 98c in the dollar when the GST was introduced in 2000-01 to just 30c in the dollar in 2015-16. This has been absolutely unprecedented. The worst historical comparison predates the GST, when Victoria during the Second World War saw its relativity drop to 0.68 in its Commonwealth grants.

Recall what was said by Treasurer Peter Costello when the GST was first introduced. He said that the purpose of the GST was to give access to:

… a revenue base that grows in line with the economy. It will provide a secure base to fund their services.

For a variety of reasons—many of which I have touched on previously in this chamber—this has not been the Western Australian experience, and the problem is significantly compounded by the three-year-lag issue.

When the Commonwealth Grants Commission makes its determination as to WA's GST entitlement, it is using data that reflects economic conditions from three years previously to determine today's allocation. It is plainly not realistic to expect states to meet their obligations today based on economic data that is between two and four years out of date. Western Australians understand that there needs to be some capacity for movement in the system, but greater certainty is required if states are going to meet the obligations they have to their citizens.

For those who seek to characterise this as a uniquely Western Australian complaint, I would draw their attention to some recent comments made during the federal election campaign by the New South Wales state government. The Treasurer of New South Wales has confirmed that the most recent Commonwealth Grants Commission determination of GST revenue entitlements has cut New South Wales's share by $850 million. The New South Wales Treasurer has also warned that state parliament that New South Wales's GST relativity is forecast to fall to 0.81 and said that this will have a significant impact on her state of New South Wales. I just note that Western Australians dream of relativities of that magnitude—it seems a very long way off our current 0.303 relativity for 2016-17. She also said New South Wales is a victim of its own success when it comes to GST revenue, which is something that Western Australia has been at pains to point out about itself for many, many years. Nonetheless, it is good to see other voices from other states now calling for reform of the way the Commonwealth Grants Commission makes its determinations in relation to each state's and territory's GST revenue entitlement. Reform is long overdue.

Since this parliament last met, there has been a significant development—a breakthrough, even—that many of us in Western Australia have sought for a very long time. During his address to the Liberal Party state conference in Western Australia on 13 August, the Prime Minister acknowledged 'the huge gap between what West Australians pay in GST and what they receive back' as being 'unprecedented'. 'West Australians have every right to feel aggrieved,' said Prime Minister Turnbull. Of course, we are used to hearing expressions of sympathy with Western Australia's plight, but what the Prime Minister said next was very, very significant. He confirmed that this government would move 'to change the arrangements so that we set a percentage floor below which no state's receipts can fall'. These are the words that Western Australians have been waiting to hear from a Prime Minister for many years. It is a commitment that the Premier and the state government in Western Australia have welcomed as very encouraging and as an important structural reform in the GST distribution process.

Of course, the federal coalition has long recognised the problem and, over the past two years, has made top-up payments to Western Australia totalling almost $1 billion to redress the imbalance of the GST revenue distribution arrangements. This has now been backed up by the Prime Minister's commitment to introduce a floor for GST relativities.

I think it is worth noting that, despite the significant GST revenue handicap, the WA state government has achieved remarkable things during its time in office since September 2008. More than 200,000 jobs have been created in my home state on the back of an increase to the value of business investment in Western Australia of $424 billion. Gross state product has grown by an average of five per cent per annum, which exceeds the national average. Meanwhile, the value of exports from WA has risen by some $40 billion, and there has been approval for some $30 billion in iron ore projects and for the massive $56 billion Gorgon project. These opportunities have, naturally, attracted new residents to Western Australia, both from overseas and from other parts of Australia. In fact, the population increase has been around 400,000—almost equivalent to the entire population of Tasmania.

Just think about the demands that such a drastic increase in population places on a state government, particularly in terms of the development of crucial infrastructure and of the delivery of key services in health, in education and in transport. That would be a challenge at the best of times. Just imagine what a challenge it is when you are seeing your GST relativity fall to 0.3 and millions upon millions of dollars flowing from WA to other states that are not facing challenges of such magnitude. That is why the Prime Minister's commitment is so significant, and implementing the floor will be critical to securing WA's future.

But there is a threat. It comes in the form—no surprise—of the Australian Labor Party, both at the state level, in WA, and here in Canberra.

Claire Moore (Queensland, Australian Labor Party, Shadow Minister for Women) Share this | Link to this | Hansard source

Oh no!

Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

Oh yes, Senator Moore. Does anybody really think that Mark McGowan, the WA Labor leader—the man who left WA with crippling teacher shortages as education minister and who was part of a government that literally could not keep the electricity on—will be able to fight for WA's interests effectively and make sure the floor is implemented?

And what of Mr McGowan's federal Labor colleagues? Following the Prime Minister's announcement, the Leader of the Opposition, Mr Shorten, was given numerous opportunities by journalists at media conferences to support the plan to implement a floor. He pointedly refused to do so, simply dodging the questions. We in Western Australia all know what that means. As we saw with the mining tax and with Labor's refusal to do anything to reform the GST, the federal Labor Party simply sees WA as a convenient cash cow which it can use to prop up its political position in the eastern states. It is clear that, if Western Australians want to achieve GST distribution reform and see a floor implemented, they need to think very carefully about the choice that they make at the WA state election in March next year.

Having agreed the principle of a floor, the debate must now focus on where that floor should be. But, before that point, a sensible next step would be to commission a thoroughly independent, comprehensive and economically focused inquiry into the national economic gains to be derived through imposing a floor through which GST distribution relativities cannot fall.