David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

My question is to the and the Minister representing the Treasurer, Senator Cormann. The government has announced that it will provide more taxpayers' funds to the states via the GST fund. The government has not taken the advice of the Liberal Democrats to stop all transfers from the Commonwealth to the states, which would help fund massive income tax cuts, prompt the states to manage their spending and make each level of government accountable for its own actions. Can the government confirm that its $9 billion announcement this week will cost each and every Australian $360 of extra tax or extra debt? Will the government admit that there is no longer any semblance of a link between GST revenue raised and the amount of money shovelled to the states, proving that federal financial relations are a shambles?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

Firstly, I can confirm that the plan which the Prime Minister, as the Treasurer, put together to ensure that Western Australia receives a fairer share of the GST, in a way that leaves every other state better off, will soon be introduced into the parliament so that it can be legislated. By all accounts, reading the latest statements of various members of this parliament, it looks as if there might well be a consensus for that legislation to be passed through the parliament, which will be great news for Western Australia, great news for every single state across Australia and great news for our country.

Does it involve a level of additional federal expenditure to ensure that we can facilitate this arrangement—this way forward, this important reform—in a way that leaves every state better off? Yes, it does. As part of the overall GST pool, it's a very small proportion, but it is a sufficient proportion for us to be able to genuinely provide reassurance to all states and territories that they will be better off and not worse off as a result of dealing with this important issue, which has been in the too-hard basket for way too long. I would say that, under our government, we have a demonstrated commitment to lower taxes. It is not that long ago that this parliament agreed to our plan to reduce personal income taxes by $144 billion over the next decade. That is great news for hardworking Australians and gives them the right incentives and encouragement to work harder, which will help drive stronger economic growth and increase prosperity into the future. We have already legislated lower taxes for small and medium sized businesses and we are about to legislate a faster reduction in business taxes, down to 25 per cent, for small and medium sized businesses.

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Leyonhjelm, a supplementary question.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

The government has promised that the Western Australian government will receive at least 75c in the GST dollar. Why shouldn't it receive 100c in the dollar? Why should Western Australia continue funding beggar state governments in Tasmania and South Australia, which spend more time hugging trees and wind turbines—

Honourable Senators:

Honourable senators interjecting—

Scott Ryan (President) Share this | Link to this | Hansard source

Order!

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

Mr President, can I have a little more time to finish?

Scott Ryan (President) Share this | Link to this | Hansard source

Order! I'm counting, Senator Leyonhjelm.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

Thank you. Why should WA continue funding beggar state governments in Tasmania and South Australia which spend more time hugging trees and wind turbines than developing their states? What benefit does WA—

Scott Ryan (President) Share this | Link to this | Hansard source

Order, Senator Leyonhjelm! I have added quite a bit of time to your question given the interjections. I will call the minister to answer the question.

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

The people in the great state of Western Australia are very generous people. Being part of a federation, those of us who live in Western Australia do support the principle of horizontal fiscal equalisation. In Western Australia, people just want to see a fair share. It's long been the proposition—which is a bipartisan proposition in Western Australia—that there should be a floor of at least 75c in the dollar. Nobody has ever argued, on our side of politics—we certainly haven't been putting the proposition—that there shouldn't be a level of equalisation across our country to ensure that the quality and standard of services that can be provided to citizens wherever they live in Australia can be of a similar level. The problem was that horizontal fiscal equalisation got out of whack. The formula, in the way it has been operating, is broken, and we are proposing to fix it. (Time expired)

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Leyonhjelm, a final supplementary question.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

Isn't it a fact that, after five years of Liberal government, you are still attempting to buy votes by handing out other people's money? Doesn't it worry you when Labor and the beggar state governments agree with your efforts at redistribution? Shouldn't a Liberal government reduce the size of government rather than grow it to more gargantuan proportions?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

Well, we are reducing the size of government in the economy. When we came into government, we inherited a trajectory where government expenditure as a share of the economy was headed towards 26.5 per cent as a share of GDP and rising. Of course, we have been able to bring that down to below 25 per cent and falling. That is, of course, work that continues. We will always ensure that government is only as big as it needs to be—as small as possible but as large as it needs to be. We stand for lower taxes and smaller government. Indeed, the proof is in the pudding. We have been successful in legislating significant tax cuts both for hardworking families and for business, which will help to strengthen the economy, create more jobs and ensure that families around Australia have the best possible opportunity to get ahead. If you're concerned about taxes, you should be concerned about the Labor Party, because their plan, of course, is to increase taxes by $200 billion over the next decade, which will cost jobs and hurt families. (Time expired)