Senator Alan Eggleston



Senator EGGLESTON (Western Australia) (19:06): The distribution of GST, as has been said, is very inequitable at the moment. Western Australia is carrying the Australian economy with its enormous resource projects. Oil and gas, iron ore and magnetite projects are boosting our export income and balancing our budget, and it is really because of Western Australia that Australia is seen by the rest of the world as having a very strong economy. It is those exports, mostly to North-East Asia, that have made the Australian economy resistant to the vicissitudes which have rocked the world in the last two or three years—the global financial crisis and the problems that are occurring in western Europe at the moment. All sorts of people have predicted that the problems in western Europe may result in a recession not unlike the 1930s depression because there are features which are very similar to those which prevailed at the time of the 1930s depression.

Western Australia occupies a third of the Australian continent—an enormous area of country, a million square miles in the old coinage. Because of that, we have a particular need to have sufficient funds to provide infrastructure. We have in Western Australia what I call 'the three long lonely roads'—the Great Northern Highway, the North West Coastal Highway and the east-west highway, or Eyre Highway as it is known. All of these are not particularly good roads. There is also a need for ports such as Oakajee and other infrastructure to maintain the mining industry and minerals boom in Western Australia.

The GST was set up as a dedicated tax by the Howard government to provide an income stream to the states. That is an important thing to remember. The states, you will recall, had the power of income taxation until the Second World War, and it was handed over to the federal government as an emergency measure for the duration of the war. The GST was set up by the Howard government as a means of providing a stream of funding to the states for them to finance the services for which they were responsible.

To see Western Australia reduced to a share of 55 per cent of its GST defies the rationale for the GST in the beginning. It means that Western Australia simply does not have the funding to build the infrastructure that is needed to maintain the mining boom, which, as I said, is the basis of the success of the Australia economy. The Western Australian Premier, Colin Barnett, wants a floor of, I think, 75 per cent of GST to be established so that, when the Grants Commission redistributes the GST, the absolute maximum—or minimum—amount of a state's GST which can be redistributed is 25 per cent, and each state would have returned to it 75 per cent of the GST generated within its jurisdiction. I believe that is a very sensible, fair and rational approach to horizontal financial equalisation through the GST.

The GST, as I have said several times already, was designed to be a dedicated income stream for the states. It is an absolute abuse of the concept, undermining the principle upon which this tax was established, for a state like Western Australia to find that its share of the GST generated in Western Australia is only 55 per cent—and, as Senator Cash said, there are predictions that it may get down to as low as 25 per cent. We all know that Western Australia was a reluctant joiner of the Federation. Certainly we benefited during the times when Western Australia was, as Sir Charles Court used to say, a mendicant state. But that is not the situation anymore. Western Australia does not object to contributing, but we think it should be on a fair and rational basis and the state should receive a fair share of its GST. I seek leave to continue my remarks later.

Leave granted.

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