Opinion: David Crisafulli must fight for Qld’s fair share of GST

As the most senior sitting Liberal in Australia, David Crisafulli has a potential national platform for a critical issue, writes Graham Young. VOTE IN OUR POLL

After the Coalition’s rout at the federal election, Queensland Premier David Crisafulli is the most powerful sitting Liberal in Australia. Picture: Evan Morgan

The federal election result leaves David Crisafulli as the most senior ruling Liberal Party politician in the country.

He’ll feel the onus on him to show that Liberals can successfully govern, but it also gives him a potential national platform to demonstrate how Liberal values of reward and competition can make a positive difference to the country.

Labor won the federal election without a concrete platform and with vague aspirations to improve national productivity, despite having spent the last three years implementing measures that trashed it.

This creates an opportunity.

The Queensland government faces huge challenges.

It promised to honour a number of reckless spending promises from the previous Labor government, inherited an infrastructure program which is out of control and well over budget, at the same time promising no new taxes and debt reduction.

It’s possible that it can achieve all of that, but not under the current federal-state arrangements. This is where the opportunity lies.

While it is an arcane area, reform of state commonwealth relations can help to deliver David Crisafulli what he needs, as well as providing the federal treasurer with a productivity agenda.

On March 14 Queenslanders woke to the news that the Commonwealth Grants Commission was going to strip the state of more than $5bn of GST revenue because the previous government hiked coal royalties.

Under the bizarre system used to distribute the GST this was entirely predictable, and former treasurer Cameron Dick would have been quite cynically aware of the consequences when he raised royalties.

Western Australia, Australia’s premier mining state, had a similar problem. Because of its success at mining (not its success at extorting miners) it received 30 per cent less GST than it deserved on a per capita basis.

It did a special deal to with the previous federal Coalition government to correct the situation, in the process demonstrating the system is broken.

Australia divvies up its GST to the states in a way which punishes the best performers and rewards the losers.

In this latest carve-up Queensland money will go to help support Victoria, despite Victoria’s problems being all of its own making.

If Queensland wants to stay a leading state and honour the LNP’s promises it needs to be more like WA than Victoria, which means expanding its mining industry.

The announcement that nine new gas fields will be opened up shows the government understands mining is the key.

It needs to be rewarded for this, not penalised.

Mining is just one example.

At the moment, anything Queensland does which might increase gross state product will increase GST, which might then be siphoned off to a less enterprising state.

If Queensland cuts a tax, say payroll tax, to attract industry, or stamp duty, to improve the flexibility of the housing market, the CGC will cut her GST distribution.

It is an empirical fact that federations like Australia function better than unitary states, as long as they are run as a federation.

In a functioning federation GST would be distributed proportional to either the size of the population in each state, or its percentage of the national economy.

Former Labor treasurer Cameron Dick

Queensland and Western Australia would be rewarded for having more productive economies, and other states encouraged to catch up.

Who knows, under a properly competitive system Victoria might drill for its own gas, instead of banning all onshore exploration and drilling and whingeing because Queensland’s gas industry sells large amounts of gas overseas.

Federation is an issue where David Crisafulli could step in and organise a posse of states to agitate for sensible reform.

WA already understands the system is broken, and SA and NSW are both mining states with common sense right-wing Labor premiers who should be able to be convinced to back change. That would leave Victoria and Tasmania, not to be punished, but to be encouraged to run their states better.

A Queensland LNP premier also has an advantage in that the federal treasurer is a local, as is the Nationals leader, and the Liberal deputy leader, as well as elected representatives constituting 25 per cent of the federal opposition.

GST distributions should only be a starting point.

As well as the horizontal imbalance between states, there is a vertical imbalance because the federal government raises much more tax than the states and doles it out, often on a preferential basis.

Our federation has been drifting and declining for a long time, but the situation has now arrived where enough self-interest and necessity are present that it can be fixed.

If David Crisafulli can lead the push for a fairer federation, he will not only secure Queensland’s future – he’ll define what it means to be a Liberal leader in modern Australia.

Graham Young is executive director of the Australian Institute for Progress

Originally published as Opinion: David Crisafulli must fight for Qld’s fair share of GST