ADJOURNMENT;Goods and Services Tax – 25 Jun 2013

I would like to add a note of support to Senator Parry’s adjournment speech tonight in regard to the Advocate and their Show Some Respect campaign. It is an important issue and I think Senator Parry and I could spend many hours discussing this issue together. Tonight I would like to speak about an issue that is really important to my home state of Tasmania and that is the concern that stems from comments made the Leader of the Opposition, Mr Abbott, on 1 May last year. While visiting Western Australia, Mr Abbott was quoted in the Australian as saying:

I think that what ought to be very seriously considered by the government right now is the proposal that all the Liberal states have put up, that the GST revenue should be distributed on what is closer to a per capita arrangement.

This is the unified position of the Coalition premiers. I think it makes a lot of sense.

According to the most up to date figures from the Commonwealth Grants Commission, a per capita distribution of GST would mean a loss to Tasmania’s revenue of $704 million in 2013-14 alone. To put this into context, this is equivalent to the loss of 800 doctors, 3,000 nurses, 500 allied health workers and over 100 child protection staff.

I would have expected that my Tasmanian Liberal colleagues in this place would have joined government members and senators in standing up for Tasmania, and standing up against plans to rip the heart out of public services in Tasmania. Instead, they are trying to insist it is not going to happen, but they cannot run away from their own public statements. I have a few tonight to mention. When confronted with this issue on Southern Cross radio on 11 March this year, Senator Abetz said:

What Tony Abbott has said is that he is willing to consider a closer arrangement to a per capita—so not a per capita basis—but closer to.

Senator Abetz’s statement confirms that the coalition is actively considering changes to the way GST is distributed—changes that would severely disadvantage Tasmania. The Deputy Leader of the Opposition, Ms Bishop, shadow treasurer, Mr Hockey, and his assistant, Senator Cormann, have all made public statements confirming they want to change the current arrangements. This has also been confirmed by Western Australian premier Colin Barnett, who revealed that he and Mr Abbott had discussions about trying to ‘fix the system’.

The proposition that we move closer to a per capita arrangement for GST distribution indicates that the coalition is not planning to rip exactly $700 million per year out of public services in Tasmania—just somewhere up to $700 million per year. I am not sure that gives too many Tasmanians a great sense of relief. I wonder how much they are going to rip out. Is it $400 million? Is it $500 million? Is it $600 million? I guess we will not know until Mr Abbott decides to reveal the details of the secret agreement he has stitched up with Premier Barnett. What we do know is that if an Abbott led coalition government is elected, public services in Tasmania will be gutted. Now that we know discussions are taking place behind closed doors about GST distribution, the coalition are trying hard to pretend they would not have the power to change the GST arrangements in government without the agreement of the states.

In the Senate on 20 March this year I was delivering a speech about the disastrous impact the Abbott led coalition government would have on the cost of living and I happened to mention the coalition’s plans to change the distribution of GST. There was an interjection from the other side, from Senator Bushby from Tasmania, and according to the Hansardthis is what Senator Bushby said:

Tasmania has an absolute right of veto. It can’t happen. You know that. Tell Tasmanians the truth.

I know that Senator Bushby has tried to peddle the same furphy in letters to the editor in the Mercury and the Examiner, but his attempt to pull the wool over Tasmanians’ eyes has been exposed. Only three weeks ago, in budget estimates, my Tasmanian Labor Senate colleague, Senator Urquhart, put the claim of the state veto power to the Secretary of the Commonwealth Grants Commission, Mr John Spasojevic. This is the question Senator Urquhart asked:

What is the process for determining the GST and who makes this final determination?

The response was:

The process is that a reference is sent to the Grants Commission asking them to update a distribution for the forthcoming financial year. The commission prepares its advice, submits that to the Treasurer and then the final decision is made by the Treasurer.

Then Senator Urquhart asked:

The final decision is made by the Treasurer?

Mr Spasojevic answered:


Senator Urquhart then went on:

Before that decision is made, do the states have to agree on the distribution before it is singed off by the Treasurer or does the Treasurer have the final decision?

The response was:

My understanding of the act—and, I am sorry, we do not have anything to do with the act—is that the act gives the authority to the Treasurer.

So there you have it. In contrast to the claims of coalition senators, my home state of Tasmania would have no power to stop Mr Abbott from changing the GST distribution arrangements in accordance with his secret deal with the Premier of Western Australia. In support of the case for per capita distribution of GST, Premier Barnett has claimed that Tasmania is a mendicant state, that we are unwilling to develop economically and that we would rather live off the public purse. Premier Barnett claimed that Tasmania was turning itself into a national park and rejecting any form of development.

It appears that the Western Australia Premier’s comments have been supported from none other than the recently endorsed federal Liberal candidate for Denison in Tasmania, Tanya Denison. In February the Deputy Leader of the Opposition, Julie Bishop, posted a comment on Facebook which criticised Tasmania’s economic performance and said the coalition would look at changing the way GST was distributed if it won government. Ms Denison—who, I must point out, only recently moved to Tasmania—shared Ms Bishop’s post and then commented that Tasmania does not pull its weight and is a burden on other states. It is an absolute mystery to me as to why Ms Denison would seek to represent people in a state she has so little confidence in, especially after living there for only a few months.

Premier Barnett’s narrative, which is supported by Ms Denison, could not be further from the truth. It is wrong for two reasons. One, there is a great deal of economic activity going on in Tasmania and, two, it fails to recognise the real reasons for Tasmania receiving a disproportionate share of GST revenue. It is about the challenges we face, which go to demographics and geography. We are an island state, which presents challenges in transport, access to export markets and service delivery. We have the most geographically dispersed population of any state or territory. We are the only state or territory in which more than half the population lives outside the capital, and this presents particular infrastructure and service challenges. We have on average an older population than the rest of Australia and a higher proportion of people from low socio-economic backgrounds. So we have a clear and simple reason for receiving a higher per capita share of GST revenue than any other state or territory—except for the Northern Territory, which has its own unique set of challenges. That reason is that it simply costs more to deliver services in Tasmania. This is the reason that a system of GST distribution known as horizontal fiscal equalisation, or HFE, exists. It is not about delivering equivalent funding for each citizen of Australia; it is about delivering a quantum of funding to ensure that each citizen of Australia, regardless of which state or territory they live in, can receive equivalent services. It is a principle of basic fairness.

When we raise this issue the response of those opposite is to accuse the government of threatening GST payments because we initiated a review of GST distribution. Not only is this blatant hypocrisy, but the opposition conveniently failed to mention an important point about the GST review: the terms of reference for the review clearly state that equalisation has served Australia well and should continue. Yes, the review was asked to consider the appropriate form of equalisation but no-one in the government has ever suggested that the basic principles of HFE should not be maintained.

As far as I am aware, the only members of this parliament who have ever suggested moving away from the HFE model are members of the coalition. Make no mistake about it, Mr Abbott’s plans, if he wins government, will gut the Tasmanian public service. They will also gut public services in South Australia and the Northern Territory, which by the way stand to lose up to $800 million and $2.2 billion respectively. Unlike the Tasmanian Liberal senators in this place, I and my Tasmanian Labor Senate colleagues will stand up for our state. We will stand up for making sure that the public services in Tasmania are properly funded, and that our state receives a fair share of federal funding.