'Canberra doesn't understand the West'

WA Premier Colin Barnett says he’s no secessionist but a passionate defender of a state under siege.

Colin Barnett says Western Australia produces more than a third of the nation's exports, and by the end of the decade it will be close to half. Picture: Frances Andrijich

COLIN Barnett is a rare species in Australia. At a time when people bemoan lack of vision, the West Australian premier has vision plus – his homilies, speeches and interviews are littered with his vision of Western Australia as the world's greatest resources province, with Barnett ready to steamroll opponents to advance it.

Yet in his style the 60-year-old Barnett is a moderate. There is no trace of the maverick or redneck. He doesn’t bestride his state like a colossus, indulge in the drum-beat of the West’s political secession or cast himself in the mould of Queensland’s Joh Bjelke-Petersen or WA’s own legendary Sir Charles Court. “I am an Australian first,” Barnett says, interviewed in his office overlooking Perth. “But I am very proud and very concerned about Western Australia. I am not of a secessionist type. I am not of the school of blaming Canberra for everything. This is not my politics and it has never been my politics.”

WA-born and bred, Barnett is soft-spoken, friendly, a touch overweight, an economist by training, renowned for his stubbornness but with a pervasive passion for the development of the West. With a sense of self-deprecation he likens his elevation as Premier to a Lazarus-type political resurrection of the John Howard variety.

Having previously announced his impending retirement from politics, Barnett was recalled as Liberal Party leader on August 7, 2008. He went into a menswear shop in Leederville to buy a new suit when news came over the radio that ALP Premier Alan Carpenter was calling an election. “I had only been leader again for one day,” Barnett says.

He walked out with two suits, not one, and walked into the premier’s office six weeks later after brokering a post-election deal with the National Party and three independents. It was an omen. Since then, luck has broken his way.

For the past two years he has been the nation’s only Liberal Party premier. But that is not Barnett’s distinguishing feature. He is different because the West is different. Suburban Perth retains its sleepy stability, yet the state marches to a tempo chained to epic global events. Australia is now assuming a split personality. As politics in the Melbourne-centric southeastern corner is about the Labor-Green alliance, carbon pricing, gay marriage, broadband rollout, the mining tax, fairness and dividing the spoils from the resources boom, the engine-room of Australia’s national income surge seems out of sight and usually out of mind.

“I don’t believe that much of the rest of Australia, including the federal bureaucracy, actually understands this state and what is happening here,” the Premier says. It is an ancient lament with a fresh urgency. Barnett’s central charge is that the West has become an income target of convenience for ¬Canberra Labor. He is now in serious policy conflict with the Julia Gillard-led Labor Establishment, its economic brains trust at the Ken Henry-led Federal Treasury, and, in a more pervasive but less defined manner, with the political values that dominate the Sydney-Canberra-Melbourne axis and Australia’s population centre.

Senior WA Liberal in the national parliament Julie Bishop says: “I believe the divisions between Western Australia and the federal Labor Party and its platform run very deep. The proof is the election results.” Labor holds only three out of 15 federal seats in the West.

Barnett’s anger towards the Labor Establishment is restrained yet tangible. WA now exerts a transforming impact upon the nation, yet much of Australia seems ignorant of this story and its meaning beyond facile media grabs. “I think Kevin Rudd understood it,” Barnett says, a remark sure to surprise many. Rudd as PM made a conscious effort to regularly visit the West.

“This state, if allowed to get on with its business, would solve the budget problems of the Commonwealth Government over the next decade,” Barnett brags. “The mining tax was a very critical issue. You had leading figures in the Labor Party saying this is an industry of billionaires when, you know, there won’t be a family in Perth that doesn’t have a link to the mining industry. People instinctively knew that. There wasn’t any need for the Liberal Party to explain that.”

Julia Gillard travels abroad as national leader. Barnett travels abroad as political spokesman for the mining development that has provoked the attention of the world. “The growth of China, with India to follow, has brought with it the third great wave of economic development for Western Australia,” Barnett says. “The state has the natural resources Asia needs. Some four billion people, or 60 per cent of the world’s population, live to our north and in the same time zone. The state’s industry, mining and petroleum, is worth $70 billion and there’s $170 billion of projects I expect to get under way within the next five years. We don’t look over the Nullarbor, we look over the horizon to Asia.”

Here is the contradiction at the heart of Barnett’s position: he needs the East yet loathes the redistribution of income and power he believes Canberra is imposing upon Perth. “I am not in a sense at war with Canberra,” Barnett says. “But this state is under siege from Canberra over our GST revenues, over Labor’s attempted health takeover and over the mining tax on our state’s natural resources.” Barnett debunks any idea this is Perth parochialism. In fact, it is a policy conflict over how the Australian Federation works during the current resources boom, a long-run event.
Barnett is contemptuous of the Eastern states’ mindset that the West is merely “China’s quarry”, tracing this back to the ABC. He loathes the idea, saying it typifies Eastern thinking of the West as “a bunch of hillbillies” reliant upon a primitive “dig it up, ship it out” economy, lacking Eastern seaboard sophistication.

“I don’t want to hear this again,” he says. Barnett leans forward to make his clinching argument: “Australia’s significance internationally is built around its mining and energy industry and exports.” That means WA. He talks of a new Rio Tinto operation. “I don’t have the exact figures,” he says, “but they have a new facility of about 400 engineers and computer specialists. They operate 1200km of railways, six or seven mines, ports, six or seven ships at once. This is the most sophisticated technology outside the military. The technology in the petroleum industry is world-leading. The environmental management is world-leading. This is a sophisticated industry, not a basic industry. There’s a resentment, I guess, that this is still not understood.”

Making of a leader
Barnett’s entire life has been a preparation for his current job. Born in Perth in 1950, he grew up in prestigious Dalkeith; his father was a Ninth Division, Rats of Tobruk veteran who, like many others, purchased a block of land when the Ninth returned from the Middle East before it went to New Guinea. It was a solid, middle-income family, with Barnett attending Nedlands primary school and then Hollywood High. After gaining an economics degree from the University of Western Australia, he spent a cadetship at the Bureau of Statistics in Canberra and then lectured in Perth, before being recruited as economist and subsequently executive director at the state’s Chamber of Commerce and Industry. From this business platform he became Liberal MP for Cottesloe in 1990 and held a series of portfolios focused on resources and energy in Richard Court’s Liberal government.

“Richard Court was a good premier,” he says. But the Liberals were routed at the 2001 election, losing five ministers. The remaining rump was weak, old and divided. Seeking a new look, Court tried to recruit federal Liberal Julie Bishop but the story leaked, humiliating Barnett and weakening his position after he did become leader of the Opposition. “That made my job impossible,” he says. “It was just a dreadful period.”

Barnett lost the 2005 election off the back of his bizarre and unilateral pledge to solve Perth’s water problem with a 3700km, $2 billion water canal from the state’s north to its capital, unveiled during his TV debate with ALP Premier Geoff Gallop. No feasibility study had been done. The idea was ridiculed. The cost was an underestimate. The poll became a referendum on Barnett’s “shoot-from-the-hip” infrastructure promise. When quizzed, Barnett is still defensive. “I still think using the water of the Kimberley is an important part of this state’s future, but it has gone for the foreseeable future,” he admits.

After the election defeat, Barnett was diminished. He retired to the backbench and in November 2007 announced his retirement from politics at the coming election. “I wasn’t bitter, but I was disappointed,” he says. “I had always wanted to be premier. But I thought I would do something else in life and have one last career.”

It was only the error-prone behaviour of Liberal leader Troy Buswell, with his notorious chair-sniffing incident, that reduced the WA party to desperation, just as the federal Liberals had reached desperation in late 1994 when Alexander Downer was leader. “We were looking at potential decimation,” Barnett says. “I am a friend of Troy’s. I didn’t think it would have been that bad. But I was on my farm when Troy rang me and said he was going to step down.”

Barnett was the only viable candidate. He took the leadership and was handed a gift when Alan Carpenter called a snap poll. It meant ¬Barnett’s honeymoon coincided with the election. “I was seen as experienced, though I hate the word, and probably reasonably intelligent,” Barnett says. “I said to Julie Bishop at the start, ‘We can win this but I need your help.’ We had been getting on fine since the bust-up a few years earlier. And she did. We made a pact to give it everything. It didn’t bounce my way in 2005, but this time it did.” From an unlikely start, Barnett scraped across the line and formed a government after paying a high price to win the support of the Nationals. But he remains under pressure as Premier running a minority government and carrying for most of this year the Treasurer’s job as well.

Barnett interprets the West’s history in terms of four great leaders and three transforming booms. For him, the men who made the West were the first Governor, Sir James Stirling, a British naval officer, whose enthusiasm was pivotal to the creation of a British colony at the Swan River; Sir John Forrest, the first WA premier, who took the West into the Australian Federation and served in a series of early non-Labor national governments; Sir Charles Court, the state’s greatest premier, who as minister for industrial development and as premier drove and supervised the Pilbara and North West Shelf developments; and John Curtin, Labor hero, the nation’s World War II leader and the only prime minister who held a Western Australian seat.

Modesty sees Barnett reject comparisons with Charles Court, saying: “What Court did was create an industry where there was nothing.” Yet Court remains his model. “Certainly, in the way he approached things, I guess I have replicated that,” he says.

Barnett sees himself at a pivotal point in the West’s evolution. The three historical phases he identifies are the 1890s gold rush that made possible WA’s joining the Federation; the mining boom of the 1960s and 1970s that tied Australia to Japan’s industrialisation and created the export trade; and the current boom over which he presides, based upon China and India and the new LNG export boom.

“This state produces well over one third of Australia’s exports and I think by the end of this decade it will be close to 50 per cent,” Barnett says. “In terms of global significance, the world’s two biggest mining companies, BHP Billiton and Rio Tinto, each of them would probably have one third of their total assets in Western Australia. The Gorgon gas project led by [US company] Chevron is the biggest project Chevron has ever undertaken, either inside or outside the United States. There is nothing bigger in the world. This state currently produces about 18 million tonnes of liquefied natural gas. It will be 60 million tonnes by 2020, and second only to the state of Qatar.”

The scale of WA’s development has global significance – Gorgon will constitute 8 per cent of world traded LNG, the state produces 19 per cent of the world’s iron ore, 20 per cent of the world’s alumina, and 15 per cent of the world’s nickel.

Barnett’s steamrolling style is revealed at James Price Point in the Kimberley, where he backs the nation’s biggest oil/gas company, Woodside, in its plans to locate a $30 billion gas project. Greens leader Bob Brown recently visited this pristine coast, called the site “a living ecological treasure” and joined with indigenous groups resisting Barnett and Woodside. The Premier’s bid for compulsory land acquisition and insistence the location is best highlights his development ethos. It will become a defining showdown.

Bankrolling the nation
On the national stage, Barnett’s battle with the Rudd and Gillard governments penetrates to Labor’s management of the resources boom. “What we’ve seen in the last year is that Western Australia almost feels under siege,” he says. “We have been reacting to Canberra, not being aggressive.”

Barnett has three grievances, the most significant being the extent to which the West subsidises the rest of Australia through the GST distribution. Barnett says at present WA is returned only 68 cents in every GST dollar. “This situation has become simply unacceptable to me,” he says. “It is unacceptable to all Western Australians. And the public understands this. Yet projections over the next three years are that this return will fall to 54 cents and keep heading south. That almost gets to the scale of a Boston Tea Party revolt, not in a physical or political sense. But people here have just had enough.”

Barnett concedes the West’s income must be redistributed to the rest of the nation. His dispute is not with the principle but the process. He says it has gone too far and demands a floor for WA with a return of 75 cents in its GST dollar. Alarmed at the advice going to Gillard, he says: “I don’t think the federal Treasury has any sympathy for us.” In his critique, Barnett is right. The farcical “equity” rules applied to divide the GST revenue between the states are obsolete. They penalise efficiency and reward incompetence and they need to be abolished.

Asked about Gillard’s modified pre-election mining tax proposal, Barnett gives no quarter. “It has got no support in Western Australia,” he says. “I don’t believe this deal with the big three miners will survive. It’s their agreement, not ours. Now 65 per cent of this mining tax comes from Western Australia. It is clearly seen as an attack on the mining industry, and an assault on the Western Australian resource income base.” He alleges the tax is a Canberra campaign to seize control of the mining industry and that submission to the Gillard government “would be Western Australia giving away its future.” He shakes his head. “I was stunned, Paul, when the other premiers said it was a good idea.”

Barnett is appalled that the initial tax proposal advanced by Rudd came from the Treasury’s tax review. “I said, ‘Western Australia won’t do this,’” he says of the April 2010 meeting in Canberra when the issue was raised. “When I made the remark that I understood the theory of a resources rent tax, Kevin Rudd looked at me and said, ‘But I thought you agreed’ and I said: ‘No, it’s never been discussed and I would never agree.’”

Listening to Barnett, the depth of distrust and deadlock between Perth and Canberra seems vast. The Gillard Government cannot tolerate the states continuing to lift their royalties once the new federal resources tax applies. How does Canberra force the states to buy this deal? Barnett says: “Western Australia will always collect its royalties and always preserve the right to increase or decrease its royalties. Julia Gillard cannot deliver on any commitment for state royalties not to increase.”

Don’t count on it. Gillard needs to legislate this tax. The mining tax, ultimately, cost Rudd the prime ministership. And Gillard’s authority is now at risk. She will be ruthless both in negotiating and driving an outcome – and that means more conflict with WA. The truth is that federal Labor is pledged to implement a mining tax and the principle of a national resources tax makes sense.

The third dispute is Rudd’s policy, inherited by Gillard, of demanding that states surrender to Canberra a third of their GST revenue to help fund the new national hospital program. Every state except WA has submitted in principle to this demand. “It meant for Western Australia, in effect, taking half of what we’ve got left,” Barnett says of the GST funds. “It’s just untenable. I told Kevin Rudd we could see merit in the pooling of commonwealth and state funding for part of the public hospital costs. But we won’t relinquish our legal share of the GST.”

Barnett is ready to pay the price. He says that WA would forfeit $90 million annually by its refusal “which is enough to run our health system for five days.” He alleges Canberra’s real motive is obvious. “It’s not really about health,” he says. “It’s about gaining control of the GST, a growth revenue source.”

He has no time for Treasury’s policy of a carbon price to limit greenhouse emissions. “It is a second-best policy,” Barnett says. He is a direct-action man with a typical West Australian outlook – the solution is “more natural gas in our power generation”.

“Why are we selling so much natural gas to Asia?” Barnett asks. “Because Asia saw years ago it was the clean, flexible fuel. Australia is not using its vast gas reserves and this is our greatest energy policy failing. With no taxpayer subsidy, no carbon tax, you can reduce your emissions with natural gas.” It is a warning to Gillard: don’t expect the West to back a carbon price.

The most dramatic evidence of differences between the West and the rest is the Howard Government’s unpopular WorkChoices at the 2007 election. At that losing election, the Coalition still won 53.3 per cent of the two-party preferred vote in the West, lifted to 56.4 per cent at this year’s election. “The current voting pattern in the West started with industrial relations,” Julie Bishop says. “The Howard reforms involved Australian Workplace Agreements and Labor’s campaign against them just did not resonate in the West, where people were gaining from these agreements.” If Bishop is correct and the anti-WorkChoices campaign had little impact in the West, it suggests a deeper political fault line.

The key to Barnett is to see him as a professional politician responding to the West’s political, cultural and economic needs. Australia has reached a watershed: the resources boom is exposing and destroying the outdated rules of Federation. Those rules need to be rewritten. That is difficult and unlikely to happen. The result is an escalator towards more strife across this big country. Colin Barnett’s solutions are imperfect, but his message needs to be heard.