Editorial: GST’s farcical formula exposed

The states are like jealous children, but there’s no reason any of them should be the golden child, writes the editor.

Treasurer David Janetzki will address the Committee for Economic Development today. Picture: Steve Pohlner

As any parent knows, jealousy can be poison in a family.

If one child thinks a sibling is getting preferential treatment because they are smarter or better at sport, there will be trouble.

Similarly, if there is a perception that a sibling who is irresponsible or misbehaves is getting a leg-up, the others act like they are being punished.

For parents of multiple kids there is a constant balancing act not just to make sure that treatment is fair, but that it also appears to be fair.

This is the situation the federal government – the parent if you will – finds itself in as it divides the GST takings among its children, the states.

All the siblings are thoroughly annoyed with the favouritism shown to the “golden child”, Western Australia, and for good reason.

Under a deal struck by then prime minister Scott Morrison in response to sandgroper complaints that they were being dudded, WA has received a guaranteed piece of the GST pie, set in stone regardless of their booming mining sector.

And they are laughing all the way to the bank.

In their state budget earlier this month, they announced a seventh consecutive surplus, of $2.5bn, with a $2.4bn surplus forecast for next year.

To put that into perspective, Queensland – also a resources-rich state – is forecasting an operating deficit of $8.581bn for next year.

That’s bad enough, but under the completely impenetrable formula used by the Commonwealth Grants Commission to calculate GST allocations, Queensland is being forced to subsidise the economic giants of NSW and Victoria. (We use the term “giant” for Victoria in the historical sense. “Basket-case” more adequately sums up their recent economic performance.)

Treasurer David Janetzki will use a speech to the Committee for Economic Development today to attack the ridiculous nature of the carve-up – including that Queensland is paying for Covid-19 failures south of the border, five years after the fact.

But more ridiculous still is that Melbourne requires twice as much funding for ferries as Brisbane.

How the CGC reached that conclusion, given that the ferry service on the Brisbane River transports about four million people a year, while Melbourne’s sole ferry is a rickety punt that takes bike riders across the mouth of the Yarra.

It transports about 100 of them a day in a vessel that looks a bit like a high-school bike shed.

Mr Janetzki says of that bizarre conclusion: “The Yarra has nothing on our brown snake, yet buried in the CGC’s mishmash of assessments is that Melbourne requires twice as much funding for ferries as Brisbane.”

It is a ridiculous assessment, but perfectly illustrates that the formula for calculating GST distributions is a sinking ship.

With WA’s sweetheart deal scheduled for review next year, it is time all elements of GST calculation were looked at, with a view to making the system fair and transparent.

MUST BE DON DEAL

Love him or hate him, there is no getting away from the fact that US President Donald Trump has changed the way international diplomacy is done.

Mr Trump absolutely thrives on being the centre of attention, and since his second term in the Oval Office began in January he has been just that, with a conga line of world leaders – some fawning, some terrified – lining up to get some ‘face time’ with him.

While it may have been as much bad luck as bad management, our own Prime Minister Anthony Albanese has not been able to secure the coveted meeting.

Mr Albanese wants to secure an Australian exemption from Mr Trump’s sweeping tariff policy. Mr Trump, like he does with all of America’s allies, wants to see us boost our defence spending. Whether the two things are ever linked remains to be seen.

But we should get a clue this week when Foreign Affairs Minister Penny Wong meets US Secretary of State Marco Rubio in Washington, as part of Quad Alliance discussions also involving Japan and India.

Off the back of Mr Trump securing increased defence spending from NATO members last week – up to 5 per cent of GDP – it seems like Mr Rubio may push for something similar, which may be awkward. Labor plans to lift defence spending to 2.35 per cent of GDP by 2034/35, a figure that is unlikely to satisfy Mr Rubio or Mr Trump.

Then there is the matter of the Virginia-class subs Australia plans to purchase from the US under the AUKUS agreement.

With manufacturing delays, many in the US don’t think they have the subs to spare.

Senator Wong has her work cut out for her, but we hope she is willing to compromise on the issue of defence spending. But it is high time Australia had some certainty about the future of our military.

Responsibility for election comment is taken by Chris Jones, corner of Mayne Rd & Campbell St, Bowen Hills, Qld 4006. Printed and published by NEWSQUEENSLAND (ACN 009 661 778). Contact details here