GST fair share 23/10/18

23 October 2018

DR CHALMERS (Rankin) (12:28): It's a pleasure to support the Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Bill 2018, which has come about as a consequence of a lot of work and a lot of negotiation. I think it's fair to say there's been a lot of effort put in by colleagues on this side of the House in particular. I want to pay tribute to the member for McMahon, but also to colleagues from Western Australia, from Tassie—from right around the country—who have put a lot of thought and a lot of work into the outcome that we reach today. It is an outcome that Labor are very proud to support, largely because, in many important respects, what's proposed today replicates—it mirrors; it reflects—the proposals that we on this side of the House have been making for some time.

Horizontal fiscal equalisation is one of those torturously strangled pieces of economic jargon that wouldn't get much attention in the living rooms of this country—that is, until it becomes clear to people that what we're really talking about is the level of service that people in every corner of the country need and deserve. When you explain to people that what we are doing here is carving up some of the tax base in this country to make sure that people can experience and rely on—at times lean on—the services that they need, whether they are in the Northern Territory or in other corners of the country, it becomes a really crucial part of the economic policy that comes out of this building.

The member for Fairfax did an excellent job of running through the history of HFE. There have been a number of important changes made over time as the country grapples with how to get this into the best shape so that we can deliver those services and the states can deliver many of those services and give people that reasonable level of service delivery no matter where they live. He quoted the Declaration of Independence, which made me think of another saying that has come out of the United States which has been attributed to a number of different authors. When he was speaking about the Americans I remembered the quote: 'Americans can always be relied on to do the right thing but only after they've exhausted all of the alternatives.' The reason I thought about that was that I think the government has landed on a good outcome here but first they've exhausted all of the other alternatives. It's been an unnecessarily difficult process for those opposite

And we have seen that in other areas of public policy too. Unfortunately if it is somebody else's idea—it is principally the Labor Party's idea in this case—then their instinct is always to attack it. On three different occasions we have had that dangerous instinct play out. Where Labor has proposed something, the government has said it's ridiculous. They have attacked it, they've worked themselves into a lather criticising it and opposing it. They've predicted all kinds of ruinous consequences. Finally, after all of that, and having thought about it after they've spoken about it, they've ended up adopting the course we have proposed. We propose something; they attack it and then adopt it. They did it in relation to the royal commission on the banks and on other measures including the tobacco excise, reforms to high-income super and cracking down on VET FEE-HELP rorts.

That process has happened not once, not twice but three times by those opposite when it comes to the GST distribution to the states. If we want to talk about the history of this issue, first Labor announced its Fair Share for WA Fund. The now Prime Minister and then Treasurer attacked top-up payments and then he agreed to them. When Labor announced it would make the GST floor the law, those opposite ignored the proposal, rubbished it and then ultimately adopted it. When we said the commitment to ensure that no state would be worse off should be enshrined in law, the new Treasurer rubbished that proposal earlier this month, not that long ago, and now is agreeing to do that in this legislation.

The point about that is that Labor has led the way when it comes to ensuring that every state and territory receives its fair share of GST. We have said for some time now that Western Australia has gotten the rough of the pineapple and that should be fixed without coming at the expense of the rest of the country. We are glad that the government has followed our lead on this. That's why we'll be supporting the bill that is before us at the moment. It is a bill that has come about despite the best efforts of those opposite not because of them. It is a bill which is a consequence of landing in the right place eventually but only after first having exhausted all the other alternatives.

The member for McMahon has gone through the contents of the bill pretty comprehensively, so I'll just touch briefly on some of the key components. The bill is legislating the government's response to the Productivity Commission's report into HFE. That means changing the model of equalisation. It means legislating a 'no state would be worse off' guarantee during the transition period. It also means legislating that PC inquiry at the end of the transition period to make sure it's all working as intended. It is worth noting that the legislation doesn't include provisions for that additional top-up funding for Western Australia and the Northern Territory which was announced by the government as well. Those top-up payments are important and we support them as well, in the same way that we won't be standing in the way of this bill that we, in many respects, have authored.

I think it's fair to say objectively that when you look at the way this has played out over the last couple of years we have had the member for Maribyrnong, the member for McMahon and a number of colleagues largely but not exclusively out of WA coming up with constructive proposals, and the government has been playing catch-up. As I mentioned, the Fair Share for WA Fund came about in August 2017, over a year ago. That was proposed by us, attacked by those opposite and eventually largely adopted by those opposite. When the member for Maribyrnong said, 'Make the floor the law,' that was in July, some months ago. He said, 'Enshrine it in legislation.' The Prime Minister's response at the time was to declare that there was nothing in particular that suggested it required legislation. Today, ironically, we are debating the same legislation that those opposite said was completely unnecessary.

One of the reasons we're doing that is that, at the most recent meeting of state, territory and Commonwealth treasurers, there was a unity ticket. The current Prime Minister said that there would be a unity ticket at this meeting. He was right in one important respect but wrong in another. Yes, there was a unity ticket; it just didn't include the Commonwealth. All of the states, whether Labor or Liberal, banded together—even, to their eternal credit, the government of Western Australia. They have a fine Treasurer in Ben Wyatt. The government over there are doing a terrific job. To their credit, they said it was important to them not just that they got the floor that they'd been calling for—the fair go for Western Australia—but also to make sure that the other states and territories got a fair go as well.

The Liberal treasurer in Tasmania said, 'We believe it's very important that a guarantee be put in place and legislated to ensure that, under any circumstance, the state would be no worse off.' Another Liberal treasurer, the one in New South Wales, said, 'Every treasurer from every state and territory across the country is united in our view that, if this legislation is to be passed, there needs to be an amendment to ensure in law that no state or territory will be worse off as a result of this change.' Another Liberal treasurer, the one in South Australia, said, 'We will not support the Commonwealth's legislation unless there is an amendment to put the guarantee in place.' So you can see how the government, having said that it wouldn't be possible to legislate the guarantee, under enormous pressure from state and territory treasurers of both political persuasions has now been dragged to this outcome today.

You can see why the state treasurers and the territory treasurers were so concerned about what was originally being proposed by the government. It was partly because state budgets are notoriously sensitive to GST distribution. We understand that. But it was also because they were sitting across the table from a government now led by someone who was arguably the most enthusiastic cutter of services in the budgets that he handed down and the budgets that he supported as a cabinet minister when it comes to what's happened to health and education services in this country. So even the Liberal treasurers sitting across the table from a new Morrison government which had form when it came to diminishing services in this country and not investing in them rightly and understandably sought a guarantee, a guarantee that those opposite said would be impossible, a guarantee that we are now legislating today in this bill that Labor supports.

I remember only a couple of Sundays ago, on 7 October, on the Insiders program saying to Barrie Cassidy that, given that the government had had strong views before and always folded in the face of a dedicated Labor campaign and in the face of the weight of the arguments and the pressure from the states and territories, we predicted confidently that the government would come to our position again because they had done so on this issue so many times before. That turned out to be exactly right. But, at the same time—and this was only a couple of Sundays ago—the Treasurer said that legislating the guarantee would be to walk 'both sides of the street'. He said:

What some of the states are wanting us to do is to run two parallel systems. They are wanting us to run an old set of books based on the current system and a new set of books based on the new system with the floor and the additional $9 billion.

He said:

The Labor Party can't walk both sides of the street here. They either support a fairer deal, or they can shout from the sidelines trying to make a political story.

Well, we weren't shouting from the sidelines; we weren't making a political story; we were writing the government's policy. What we predicted a couple of Sundays ago is exactly—embarrassingly, for those opposite—what is being legislated today. It's the right outcome—arrived at, by those opposite, in a typically tortured way, with another couple of episodes of the muppet show that we have come to expect from those opposite.

So the main reason we support what's being proposed is: we wrote most of it. More than a year ago, when we first announced, via the member for Maribyrnong, our Fair Share for WA Fund, he said that there was a problem with the share that WA was receiving; it wasn't fair for WA to be getting only 34c in the dollar. We said that we would fix that imbalance. We've been working diligently since then to fix that imbalance, and we think that what's being proposed here will be a crucially important step in that effort.

We've always led on this conversation about GST distribution. We care deeply about the services that people rely on. And we want to make sure that it's fair—that, if you live in one state or territory or another, you're not disadvantaged just because of the state or territory that you live in. Every Australian has a right to expect a basic level of services. Overwhelmingly, that's our priority on the Labor side of the House. That's why we go through all of this effort to make room in the budget. It's not just to make the tax system fairer or to pay down debt—which has doubled under those opposite—but also to make room for the things that we, as a society, truly value. Key among those are good services—health and education and other services—so that Australians have every opportunity to rise to their potential in this country.