Paul Murray: Anthony Albanese’s word on ‘no change to WA’s GST’ is not worth the arm it was written on

When Anthony Albanese arrives in Perth in the coming week, he will need to have packed something better than empty promises to protect this State’s “fair share” of GST revenues.

Because nobody is buying that slippery line. It’s a lie-in-waiting.

Labor rolled it out after last week’s Productivity Commission interim report that contained three options for the Albanese Government to change how the tax is distributed, all of which would damage the WA economy.

The PC’s favoured outcome is to return to the pre-2018 formula — under which WA retained less than 30 cents in each dollar of GST collected — effectively stripping $6 billion a year from the State Government’s income.

The reporter on whose arm Albanese signed a promise in February, 2024 is no longer at this newspaper, but the words are enshrined: “No change to WA’s GST.”

No change. That the Prime Minister’s WA minder, Patrick Gorman, last week parroted the same “fair share” line is clear evidence the die is set. Change is coming.

Albanese’s 2024 promise is not worth the arm it was written on. WA will get a pay cut one way or another.

The absence of an absolute guarantee of the promised same share with “no change” from the 2018 deal forged by former Liberal PM Scott Morrison is proof that we will be worse off.

“We’ve made a difficult decision,” Albanese said about his broken promises on negative gearing and capital gains tax in the recent Budget. “We’ve changed our position … because we’re confronted with what is before you.”

And now he’s changing another position. Prepare for more of the same slippery words after the final GST report is released in December.

Whatever gloss was left on Albanese after his disaster with the indigenous Voice got rubbed bare by the Budget debacle. One Nation’s Fire the Liar campaign took off overnight and burns bright.

Given Albanese’s penchant for dodging difficult issues, he might have preferred to avoid the GST review. But he couldn’t.

While the Morrison coalition government was responsible for properly including a review in its 2018 legislation, the terms of reference were up to Treasurer Jim Chalmers.

Those he contrived had as the first directive that the PC should consider whether the current arrangements are delivering “a reasonable level of horizontal fiscal equalisation”.

That fundamental instruction has determined the outcome. That phrase peppers the report. HFE is a concept that evolved in Canberra’s bureaucracy to ensure all States could afford the same level of public services from their Federal payments.

So the fix was in from the outset. The inquiry was always about meeting demands from the other States complaining they were not getting enough.

It was never about WA getting anything “reasonable”. And if HFE remains the dominant way in which GST revenues are distributed, WA will never get a fair share either.

To those fellow travellers who have hitched their wagons to the Labor Party in WA since 2017, the PC stripping this State of its privilege from abundant mineral resources should be welcomed.

This is what the socialism they signed on to looks like. “From each according to their ability, to each according to their needs” is Karl Marx’s pithy doctrine.

And that’s exactly what the PC seeks to achieve through HFE. The report says WA is an over-funded outlier under the deal, asserting we get 113 per cent of what is needed to run the State, while the rest gets only 98 per cent.

So the socialist way is for them to be given more of what we have — “according to their needs.”

The WA Labor Party’s most recent 2023 platform makes it clear: “The ALP is a democratic socialist party and has the objective of the democratic socialisation of industry, production, distribution, and exchange, to the extent necessary to eliminate exploitation and other anti-social features in these fields.”

How could Rita Saffioti and Roger Cook argue against the socialism polluting the PC report when they are supplicant to that load of old cobblers?

Bob Hawke managed to get what is known as the “socialist objective” taken out of Labor’s national platform. But the mini-Marxists in the WA branch put it back.

Of countries which are Federations of States like Australia, with central government funding distributed using a form of HFE, we are the only one which has used full equalization. The 2018 deal marginally broke it down.

Even woke Canada has a much more robust system of State payments, but it doesn’t apply HFE to its form of GST.

Nor do any of the other HFE countries. The PC ignores that. The GST should never have been included.

However, many Federations of States, most notably the USA, have rejected using HFE for sound economic reasons. The most successful economy in the world maintains an ideological preference for competition rather than equalisation.

Because competition makes economies stronger. If you don’t think the ideology behind HFE is wrong, then consider this: That system doesn’t require States to do anything to have their payments equalised.

How does that advance the nation’s productivity and economic efficiency?

And it doesn’t penalise them if they sit back and wait for the money to roll in from WA. Which is pretty much what Victoria and Tasmania do.

It doesn’t require them to compete for their revenues. That has all the worst elements of welfarism. It weakens the potential for productivity and economic efficiency gains which are needed to stop Australia’s unprecedented drop in living standards.

That’s why the PC’s report — with its economy-sapping focus on social equity — was so pedestrian and disappointing. It did not properly investigate options to HFE, maintaining it was “widely” supported by inquiry participants.

While it referenced the submissions of every other State, even Saffioti noticed it ignored WA’s “no change” position. Instead, it preferred to attack the current deal with vapid hypothetical situations.

The PC dismissed former premier Colin Barnett’s submission, highlighted on these pages on February 28, which proposed each State and Territory retain 90 per cent of their GST revenues with the remainder used for equalisation payments to the weaker jurisdictions.

It PC accepted Barnett’s model is simpler and “can improve efficiency” but said it was at the cost of “a significant reduction in fiscal equalisation”, which he disputes.

Barnett, an economist, calculates that a return to pre-2018 will eventually undermine WA’s royalties system to the extent the State gets only half of the price for which it sells the resources it owns.

That would force future WA governments to increase royalties to the detriment of mining companies and their powerful customers like China and Japan — and the emerging trade with the US in critical minerals.

Most of the public — and way too many in the media — take government reports like these at face value. They are accepted as independent and dispassionate analyses which should be followed.

However, they are often nothing like that, too many operating in a political straitjacket set by those who commission them to force a pre-ordained outcome. Some reports should just gather dust on a shelf.

The latest report shows how much the PC has changed from its glory days under Gary Banks, the chairman from its creation in 1998 until the end of 2012, a period when it was driven by free enterprise principles, not social theory.

The unions hated the PC. Labor Treasurer Wayne Swan ended Banks’ tenure, replacing him with a Victorian public servant who started the drift downwards. Swan’s acolyte, Jim Chalmers, finished the job by appointing Danielle Wood, the former CEO of the Labor-friendly Grattan Institute, as chair in 2023.

It is now a captive of the Left, also suffering because none of its commissioners is from WA. Nine of the 13 are based in Victoria. Say no more.

To make the situation worse, Saffioti and Cook have put themselves in the firing line with their rampant spending, making WA an easy target for critics of the 2018 deal.

NSW Labor Premier Chris Minns gave a sign of what is to come, accusing Cook of acting like an Arab sheikh with his profligate cash splashes.

He claims Cook — an avowed rugby league fan who has lavished cash on establishing a WA team — has offered the NRL up to $20 million to host its grand final in Perth. That’s after claims of $11m and change on Saffioti’s Italian soccer indulgence.

“That’s how rich they are,” Minns said. “I mean, you’re seeing similar behaviour from Gulf states like Saudi Arabia and the UAE and Dubai.

“We need a fairer share of that GST. Now, this interim report makes it absolutely clear that we need reform. Every State and every Territory, with the exception of WA, wants change, and I’d like to see it, too.”

Saffioti and Cook have left WA exposed and with a weakened argument through their reckless spending.

And relying on the untrustworthy Albanese to save them — and us.