GST overhaul: States unite on ‘economic baloney’

The states and territories have pushed back, urging the Morrison government to legislate a guarantee no state will be worse off.

Australian Treasurer Josh Frydenberg. Picture: AAP

State and territory treasurers have made a united call to the Morrison government to legislate a guarantee that no state will be worse off under its new GST deal, with one describing the current proposal as “economic baloney”.

Victorian Labor Treasurer Tim Pallas, NSW Liberal Treasuer Dominic Perrottet, Queensland Labor Treasurer Jackie Trad, Tasmanian Liberal Treasurer Peter Gutwein and South Australian Liberal Treasurer Rob Lucas presented a united front following their COAG treasurer’s meeting with federal Treasurer Josh Frydenberg in Melbourne today.

As well as debating GST distribution, the treasurers agreed on the removal of the GST on feminine hygiene products, and discussed matters related to funding for health, education and indigenous remote housing.

Mr Pallas said the treasurers were urging the Morrison government to reconsider their position on guaranteeing no state will be worse off under the new GST deal, which will see a floor of 75 cents in the dollar for all states legislated, with a commitment of $9 billion in top-ups over ten years.

The state and territory treasurers argue that without a legislated guarantee, some jurisdictions could still end up worse off if economic conditions change.

“If you’re going to legislate, you’re going to go against the tradition and the conventions of the GST and legislate on it, if you have packaged your whole GST reform package to

fix up the short-term problems that West Australians have, then at the very least, live up to the words of the paraphernalia and the documentation that you put out in the public domain and make sure that your guarantee is a real one and not just a set of, well, economic baloney,” Mr Pallas said.

NSW Treasurer Dominic Perrottet. Picture: AAP

“We are resolutely committed to the idea of ensuring that the guarantees that the former treasurer, and now the Prime Minister, gave to the Australian community, gave to the states, gave to the Australian people, are now enshrined in law.

“On innumerable occasions, the Prime Minister gave assurances that there would be no disadvantage to any other state.

“So all states and territories, and can I reinforce that — all states and territories — have agreed to the principle that we need these guarantees incorporated into legislation.

“We stand united on this issue, and our intention is to continue the process of lobbying to ensure the guarantee that the Prime Minister was more than happy to absolutely give — those are his word, that “absolutely” nobody would be worse off — that those words are enshrined in legislation.

“That’s the sort of absolute surety that we need in order to manage our budgets.

“The alternative could be financially catastrophic and I don’t believe that the citizens of any state, or, should I say, the people who depend upon proper budget management, would see this as a fair or appropriate thing without the guarantees that have already been given being given real teeth.”

Mr Perrottet said the state and territory treasurers called upon senators in Canberra to support them in ensuring the GST guarantee was legislated.

“If the Commonwealth Government is making commitment to us that no state or territory be worse off, it is only fair that it will also be enshrined in law,” Mr Perrottet said.

“In the modelling that’s been provided by the Commonwealth, in that iteration, they are correct in saying that no state is worse off.

“Having said that, there are a number of likely and probable scenarios that would result in the states being worse off.

“We had a commitment from the previous prime minister and the current Prime Minister.

“We accept and understand the challenges that Western Australia is facing.

“As a treasurer of a larger state, I accept our responsibility to support smaller states.

“What I don’t accept is change in the GST model which will make states worse off.

“We believe this legislation will do just that.

“That’s why every treasurer from every state and territory across the country today (is) united in our view that if this legislation is to be passed, there needs to be an amendment to ensure in law that no state or territory will be worse off as a result of this change.”

Ms Trad said she was “at one” with her state and territory colleagues.

“That is that we need to put in law the commitment made by the former Treasurer, now the Prime Minister, that no state will be disadvantaged because of the changes in the GST distribution methodology,” Ms Trad said.

Treasurer Josh Frydenberg with the state and territory treasurers. Picture: AAP

“Work has been undertaken by other jurisdictions and I do want to thank the Victorian Treasurer and the Victorian treasury for the work that they’ve done around modelling various scenarios.

“There is a real risk, a very real risk, that if the changes that are articulated in legislation from the Commonwealth government are brought into existence without a guarantee, then some jurisdictions will be worse off under certain conditions.

“We cannot prepare or forecast or model every single scenario, which in order to look at the promise given by Scott Morrison, that absolutely no jurisdiction would be worse off,

we are seeking an amendment to the legislation that makes that commitment law, and every single jurisdiction is at one on this issue.”

Mr Gutwein said Tasmania simply wanted the guarantee that had been promised legislated.

“The Commonwealth’s modelling indicates that Tasmania, at face value, would be better off, but there are certain circumstances where we may not be,” Mr Gutwein said.

Mr Lucas agreed.

“Put simply, South Australia’s position is that we will not support the Commonwealth’s legislation unless there is an amendment to put the guarantee in place,” he said.

Labor treasury spokesman Chris Bowen said it was pretty difficult to unite the states and territories on GST distribution, but Mr Morrison and Mr Frydenberg had managed to do so.

“Labor has said consistently that the floor, particularly in relation to Western Australia, should be legislated. Make the floor the law, as we’ve said. So we support the principle of legislating this,” Mr Bowen said.

“We make that very clear, and that’ll be reflected in our position.

“But Scott Morrison and Josh Frydenberg have said that no state will be worse off, but they’re not prepared to put that guarantee in writing in the law.

“Now we’ve just heard the Treasurer of NSW, the Liberal Treasurer of NSW, and the Liberal Treasurer of Tasmania, unite with the Labor Treasurers of Victoria and Queensland to say that this is unacceptable, that they’re angry about this, that they want this reflected in the law.

“This reflects Labor’s position. This is what I said two days ago, that it was concerning that the guarantee of the states and territories would not be reflected in the legislation, and this was the unanimous position of every state and territory treasurer today, unanimous -- from Tasmania to Western Australia they all agreed that this should be in the legislation.

“Every single state and territory treasurer, Labor, Liberal, small state, big state, GST net recipient or GST net contributor, they all agreed with me.”

Mr Bowen said Labor wanted to see the government’s legislation pass.

“That will be reflected in my recommendation to the Labor caucus, but we also want to see a guarantee for the people of Tasmania and NSW and every other state and territory that they won’t be worse off, and of course that will also be reflected in the approach that I recommend to the Labor Party when it comes to this legislation,” he said.

“We’ll be, as we have been, consistent, and lead the way.”

‘The states want parallel schemes’: Frydenberg

Federal Treasurer Josh Frydenberg maintained such a measure was not necessary.

“What the states want is for us to run a parallel scheme, the old system and the new system,” Mr Frydenberg said.

“And we don’t want to run a separate set of books. We want to run a new system which will be bedded down in legislation, providing certainty to the states and territories which will leave them all better off.”

Mr Frydenberg accused Opposition Leader Bill Shorten of “saying one thing in Perth and another in Melbourne and Sydney” after Labor expressed similar concerns to those of the states and territories, despite Mr Shorten declaring last month that he wanted a “unity ticket” with the government on legislating GST reform.

“Let’s not forget that Bill Shorten just a few weeks ago in Western Australia committed to supporting the Coalition’s GST reforms and called on us to legislate it where he would support it,” he said.

“So he can’t say one thing in Western Australia and another thing in Melbourne and Sydney. “He can’t walk both sides of the street. This is a test for Bill Shorten’s credibility.

“This is his chance to join us in passing legislation that will leave every state and territory better off.”

Asked why he would not agree to the states and territories’ demand for a guarantee, Mr Frydenberg said: “Because under our deal, all states and territories will be better off.”

“That’s the clear evidence we’ve put to the states and the territories,” he said.

“That’s based on the Productivity Commission’s projections.

“That is based on the data that they have from the states and territories, and we are putting in additional money in perpetuity.”

Billion dollar a year index already guarantees no state will be worse off: Morrison

Mr Morrison said the government’s billion dollar a year index would already ensure no state or territory would be worse off.

“In fact, they’ll all be better off and that’s what they’ll have as a result of the GST plan that I outlined as treasurer and that we will implement in government through legislation,” Mr Morrison said.

“The only person standing in the way of WA getting their fair deal, their fair share of the GST, is Bill Shorten.

“The legislation will be coming into parliament in a fortnight’s time and there will be a chance for Bill Shorten to do what he said he would do and that is stand on a unity ticket with myself and (WA Premier) Mark McGowan and make sure that that plan is delivered.

“Our plan on the independent work that is being done by the Productivity Commission shows that all states and territories are better off.

“It’s time we did this and stopped arguing about it.

“I’m going to get it done and our government is going to get it done and we want Bill Shorten to be on the unity ticket to ensure that is achieved when we come back.”

Mr Morrison accused the states and territories of effectively asking for a blank cheque.

“Our government isn’t in the habit of writing out blank cheques to anybody,” he said.

“What we’re in the habit of doing is setting out clear, well-researched plans that demonstrate clearly that every single state and territory is better off under this plan.”

Mr Morrison said he would take the legislation to the next election if Labor and the crossbench fail to pass it during the next sitting fortnight.