Wednesday, 19 September 2018

Political fix or real reform? WA and the long road to a GST overhaul

Political fix or real reform? WA and the long road to a GST overhaul
05 Jul

It’s a neat, if expensive, solution to a Gordian knot that fused both political and policy risks into the stuff of ministerial nightmares.

The Morrison reform proposal has one eye fixed on managing the political risk of getting the change wrong.

His job was to stem the political blood flow in WA with a solution that didn’t cost dollars in the eastern states that send more MPs to Canberra than the West.

Any hint that Queensland, NSW or Victoria would be paying for a fix in WA would cost the Liberal party votes, seats and potentially government.

But so far, so good.

On the numbers released by Mr Morrison today, WA would be better off and the east aren’t screaming for blood.

For WA’s federal Liberal MPs, Mr Morrison had three jobs when pulling his reform proposal together:

  1. Sink more money into WA so his colleagues could genuinely claim to have delivered a fairer share.
  2. Deliver on the PM’s 2016 promise to put a floor under the state’s GST share.
  3. Come up with a new model of GST distribution to get the issue off the agenda for good.

He’s done just that, which will have Liberals in the West relieved and grateful.

And heading into the impending federal election with a spring in their step.

Trust us, this time we’ll will fix it

But Labor are warning Prime Minister Malcolm Turnbull and Mr Morrison can’t be trusted to deliver a solution over so many years.

Firstly, the federal government have delayed a fix.

It’s now two-years since the PM stood at the Liberal state conference and promised a GST floor for WA.

Labor’s most senior WA federal MP Madeleine King, who was recently promoted to the shadow front bench, was wary of the federal government’s GST announcement.

“They’re asking a lot for people to trust them,” she said.

“If they’d acted when Malcolm first suggested this, at the WA Liberal party conference before the last state election, when Colin Barnett hailed it, but that just went in a puff of air and we got nothing.

Labor's most senior WA federal MP Madeleine King is taking time to consider Mr Morrison's proposed reform.

Labor’s most senior WA federal MP Madeleine King is taking time to consider Mr Morrison’s proposed reform.

Photo: Alex Ellinghausen

“It’s a pretty long bow to say you’re fixing it now just because you’ve got a political problem in WA.”

Ms King also pointed out that the extra money for WA is coming from Commonwealth coffers over the next eight or 10 years and not from the total pool of GST collected in the meantime.

“You’ve got to vote for them another three or four times and have the agreement of all the states around the country,” she said.

“Things come in a great big fanfare, they say they’re going to fix it all, but it doesn’t take long to think that this is a long time in the future you’re talking about.

“They’re asking for our votes now, but you’re not going to get any results for some time.”

But do Western Australian politicians, especially those in the WA Labor party, put down the most potent political weapon they have had in the arsenal since federation?

WA Labor had been flogging Liberals of all persuasions with the GST cudgel well before taking state government in 2017.

Much will depend on federal Labor’s reaction.

But how should federal Labor react to being put over the barrel?

Federal Labor wedged well and good

Federal Labor are between a rock and a hard place.

Opposition Leader Bill Shorten has promised a “Fair Share for WA” fund, which would work a bit like Royalties for Regions.

West Australian Treasurer Ben Wyatt is supporting the proposed changing the GST carve-up.

West Australian Treasurer Ben Wyatt is supporting the proposed changing the GST carve-up.

Photo: AAP Image/Rebecca Le May

There would be no change to the formula, but a pot of money created by legislation would top-up the state when its GST returns slipped below 70 per cent.

The pot of money would be used to pay for the kind of infrastructure that looks good with a bronze plaque bearing a politician’s name.

Mr Shorten would sink $2 billion into WA to make up the difference.

So now we have a game of political compare and contrast. On one hand, we have the Liberals with $4.7 billion, on the other, Labor with about half as much.

Pretty neat mathematics for the back of a DL flyer come election time.

WA Treasurer Ben Wyatt has already called on his colleagues in federal Labor to back the Liberal plan, which he described as pragmatic, creative and deliverable.

“I’ll certainly encourage [federal Labor], hopefully, to take a bipartisan approach to this,” he said on Thursday.

“This has been worked up by Treasury, it’s been worked up by the Commonwealth Grants Commission, no doubt it’s very difficult to do that from opposition so I think now we’re hopefully in a position where this can become the bipartisan solution.

“Ideally, we’d have both federal Labor and the federal Liberal party both committed to this outcome.”

We’re about to see how much pull WA Labor really has with their federal colleagues.

So far, federal Labor is cautious.

“I absolutely understand where Ben Wyatt is coming from and there’s no doubt that from a WA Government perspective, this is a win,” Ms King said.

“Ben understands, as do other state treasurers and premiers, that federal parliament has a federation to think about and that it’s going to require some consideration in detail, so that’s why I said it’s not that the proposal is being rejected out of hand, we just need to see the detail.

“If you’re trying to fix this over the next eight to 10 years, you need a lot of people on board.”

As good as it gets

Even though Mr Morrison’s proposal would see the state’s share of the GST rise to no more than 83 cents in the dollar in the foreseeable future, there is a feeling in WA’s corridors of power that this is as good as it gets.

And when the dust settles on the proposal, what will matter – at least to those who think in the purely political terms peculiar to nervous MPs – is the impact Mr Morrison’s proposal will have on the doorstep during the impending federal election.

WA Liberal MPs will love it, their Labor colleagues have some thinking to do.

But, when all is said and done, Mr Wyatt is right: Mr Morrison’s proposal is tough to oppose and is shaping up to be the “bipartisan solution”.

Let’s hope it is.

Nathan Hondros

Nathan covers state politics for WAtoday. He is a former editor of the Mandurah Mail, where he also covered politics for Fairfax’s regional titles.

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