GST woes are ‘WA’s fault’
Two State treasurers have accused the Barnett Government of overseeing a “protected” economy, dramatically misreading the mining boom and now wanting the rest of the country to bail it out.
In incendiary comments, SA Treasurer Tom Koutsantonis said the Barnett Government’s fiscal predicament was its own fault, saying it had baked high iron ore prices into its Budget without any regard for the normal laws of supply and demand.
He was backed by his Victorian counterpart Tim Pallas, who said poor Budget planning was no excuse to up-end the way Federal grants were shared across the Federation.
The pair were speaking at a Committee for the Economic Development of Australia conference in Canberra alongside NSW Treasurer Gladys Berejiklian when the issue of GST reform was debated.
The criticism was immediately rejected by WA Treasurer Mike Nahan, who said it was rich coming from a State like SA whose industries were dying despite heavy subsidy.
He said any historic debt WA owed to the Federation had been well and truly repaid.
Mr Koutsantonis said horizontal fiscal equalisation — the way the GST is allocated to the States and Territories — had helped build Australia into a “great, prosperous, egalitarian” nation where people got good quality service no matter in which part of the country they lived.
He said the Barnett Government wanted to change the system because of the mistakes it had made in its Budget and across the economy.
“They expected the WA minerals boom to run forever,” Mr Koutsantonis said. “The WA economy has not been liberalised, it is not open.
“It’s basically a protected economy and so the last resort is to blame the GST share.”
He said it was ironic that while the Barnett Government complained about WA’s share of the GST going to other States, he was happy to “take all this money out of the Pilbara and move it to Perth”.
Mr Pallas said Victoria was the only State to make a net contribution to the Federation since 1901. WA, which had been on “the receiving end of largesse of horizontal fiscal equalisation” for a century, was now demanding a GST change because of five minutes of trouble, he said.
Dr Nahan said the comments showed how difficult the State Government had found it to get fair reform to the GST system.
Premier Colin Barnett fields questions from the media.