Senator the Hon. Mathias Cormann
Minister for Finance and the Public Service
Leader of the Government in the Senate
Senator for Western Australia
MATHIAS CORMANN: Today is a great day for Western Australia. Today is a great day for Australia. The Senate today unanimously passed our plan to fix GST sharing arrangements. GST sharing arrangements have clearly been broken for some time. That led to some very unfair and unsustainable outcomes for our home state of Western Australia.
It has been a long journey to necessary reform of GST sharing arrangements which has been in the too hard basket for way too long. It was WA Liberal Members and Senators who advocated for a solution for a number of years, initially securing about $1.4 billion in additional federal top up payments to Western Australia to stop the drop in WA’s share of the GST, to lift WA’s share of the GST effectively to 50 cents in the dollar this financial year.
Now as part of the ongoing structural reform to secure through the Senate unanimously the passage of historic reform to GST sharing arrangements, which will deliver a better deal for Western Australia in a way that is good for our country, which is good for national growth and which also leaves every other State better off.
As WA Liberal Senators it was our privilege today to be there to secure this passage through the Senate today. But all of our WA Liberal Members and Senators were part of this effort.
It is great to see here in the audience representatives of the WA Chamber of Commerce and Industry. In particular, their chief economist Rick Newnham who have been very strong advocates who have provided a lot of intellectual grunt in terms of the national conversation around why this reform was so important.
Again, on behalf of all of my colleagues, we are very, very happy today to have secured an incredibly important outcome for Western Australia in a way that is good for our country, that is good for our national economy and indeed that leaves every other State better off and enshrining this in legislation now gives certainty to Western Australia in relation to about $4.7 billion in additional funding over the eight years to 2026-27, which will help secure funding towards hospitals, schools, police, infrastructure in Western Australia. Overall about $9 billion in additional Federal funding now to all States over the next decade. So a great outcome today.
Thank you to all involved, in particular my colleagues and also the Chamber of Commerce and Industry in WA.
Happy to take questions.
QUESTION: Have you determined how you are going to pay for it all?
MATHIAS CORMANN: Of course we have. It is very clear that as a result of the work that we have done over the last five years, our economy today is stronger, employment growth is much stronger, our Budget is on a stronger and improving trajectory moving forward. In the half yearly Budget update we will be providing an update on our Budget position. But what you can see in the most recent Budget is that we are forecast to return to balance in 2019-20, to return into stronger surplus in 2021-22 and to remain in surplus all the way through the medium term. The Federal cost over the decade is something that we have openly and transparently disclosed. It is about $9 billion over a decade. All of these numbers will be reconciled in the half yearly Budget update.
QUESTION: Almost seven years ago, the Coalition joined with, well it was exactly seven years ago, the Coalition joined with Labor in voting down a 75 cent floor in the GST. Tony Cook’s motion supported only by Bob Katter. How do you know that this is actually going to benefit WA in the long run and not another State?
MATHIAS CORMANN: What we have done here is develop a national plan, which yes delivers a better outcome for Western Australia, but in a way that is fair to every other State as well. As a national Government focussed on the national interest. That is the way as WA Liberal Members and Senators we have approached this. That is the way the Chamber of Commerce and Industry in Western Australia has approached this too. We have not approached this from the point of view of just getting more Federal cash. We have approached this from the point of view of improving a system that was unfair, that was broken, that needed fixing. It is well understood why there was such volatility in the system in the past in the context of the unprecedented mining investment boom in Western Australia. It was clear that there needed to be structural reform. We have done this as part of a comprehensive plan, rather than just through a short term measure. I have got to say, this is a problem that started in the period of the Rudd and Gillard Government. This is actually something, if you look back at my first speech in 2007, I raised this issue then. All throughout the six years of Labor Government they did nothing about it. When we came into Government, WA’s share of the GST was on a falling trajectory. It was on track to go below 30 cents in the dollar when we came into Government and was expected to go even further down. So, we in the short term were able to secure top up payments, $1.4 billion of additional funding into WA infrastructure, much needed WA infrastructure. Subsequently as a team, we were able to secure the Productivity Commission inquiry into the national growth and productivity implications of GST sharing arrangements. On the basis of that inquiry, we have put together a plan, which works through a transition to a better formula. Instead of equalising to the higher state, we are now equalising to the higher of New South Wales or Victoria, which will take some of that volatility out of the system. Which means that in the future, no State will ever be able to fall below 75 cents in the dollar as a result of the floor, but because of the changes to the formula, it will also take that past volatility out of the system, which will make it fairer for everyone.
QUESTION: Aren’t you tugging at a system that has been with us for many decades, well a decade and a bit and therefore you are making GST a political plaything even more with these top up payments, other changes?
MATHIAS CORMANN: What we have done is secured the passage of historic reform through the Senate. The Senate supported unanimously historic structural reform that makes our GST sharing arrangements fairer for WA in a way that is good for the country and that is also fair to every other state and territory, because it leaves every state and territory better off. This is an issue that was in the too hard basket for too long. We have worked for a long time to secure this outcome today. We are very, very proud as WA Liberals that we have been able to get to this point, to secure this outcome for the great state of Western Australia.
QUESTION: Are you confident that this floor, which was not advocated by the PC, it said do not put a floor in. Are you concerned that in the future having a floor will put pressure on the GST allocation system that will end up costing a Federal Government more top up payments.
MATHIAS CORMANN: No. That is why it is was so important to improve the formula. Instead of having the formula and the distribution based on the highest state, to base the equalisation based on the higher of New South Wales or Victoria, which has got much more critical mass in terms of their economic base, it will reduce the level of volatility. Based on everything that we know there is absolutely no suggestion that in years to come, after we have gone through this transition period, that anyone would under the system as it operates, fall below 75 cents in the dollar.
QUESTION: Senator, the Prime Minister has previously said the Government’s review of the Iran nuclear deal would be completed by…interrupted
MATHIAS CORMANN: Any more questions on the GST sharing arrangements? No.
QUESTION: …. has previously said the nuclear deal, a review of that will be completed by the end of the year. Will the review of Australia’s embassy location in Israel also be completed by the end of the year?
MATHIAS CORMANN: I refer you to the Prime Minister and the Minister for Foreign Affairs …interrupted
QUESTION: They have not said. They have not said.
MATHIAS CORMANN: It is obviously a matter for them to comment …interrupted
QUESTION: So you do not know?
MATHIAS CORMANN: I do not comment on matters in other people’s portfolios.
QUESTION: What do you say to Australian businesses and farmers …interrupted
MATHIAS CORMANN: You have had your go.
QUESTION: … who could be benefitted, you know the deal was meant to be signed today in Indonesia, what do you say to those farmers who were set to benefit from the Free Trade Agreement …
MATHIAS CORMANN: If you would like to ask questions about foreign affairs I am quite happy for you to do that… interrupted
REPORTER: … but they can’t benefit yet because the Government hasn’t made a decision on the Embassy?
MATHIAS CORMANN: …I am quite happy for you to refer those questions to the Minister for Foreign Affairs and the Prime Minister.
QUESTION: On the My Health Record Minister, Labor is pushing for a 12 month opt-out, a longer opt-out period for Australians. Why is the Government not willing to compromise on that?
MATHIAS CORMANN: These matters are currently being debated in the Senate. Let’s see where it lands. I am happy for you to ask questions about health to the Minister for Health. Any more questions on Finance or Treasury, otherwise?
QUESTION: On donations in your portfolio.
MATHIAS CORMANN: Yes, thank you.
QUESTION: James McGrath has called Queensland’s ban on developer donations devious. Do you agree that law harms the LNP and should it be overridden by Federal law?
MATHIAS CORMANN: What I believe is that federal elections should be regulated by federal electoral laws. That is the intent of our relevant legislation in front of the Senate. We have sought to ensure that any federal law that we put forward, any federal Bill that we put forward to the Senate does not interfere with State laws regulating State elections or local government elections. It is very much our view and it is a view that we will be putting to the Senate, that federal elections and transparency, disclosure, reporting requirements, the proposed ban on foreign political donations and other matters should be regulated by federal law for federal elections.
QUESTION: But experts have said that that Bill will still override the donation laws in Queensland and Victoria even with those amendments, so how can you expect Labor to vote for this Bill when it would have that effect?
MATHIAS CORMANN: Those experts that you are relying on also predicted that our approach to the postal plebiscite in relation to same-sex marriage would be thrown out by the High Court and it was not. They also predicted that our Senate voting reforms would be thrown out by the High Court and they were not. We rely on advice from our officials and from our lawyers. Our intention, as reflected in the legislation, as we are proposing to amend it, is to ensure that federal law regulates federal elections, including all matters in relation to disclosure and political donations and the like. It is very important for all of the entities that will be impacted in particular by the ban on foreign political donations, that there is clarity on where federal law starts and stops and where state law starts and stops. Our Bill ensures that there is clarity. We are very confident that what we are putting forward is consistent with our constitutional authority. As we were very confident that what we were doing in relation to the postal plebiscite was consistent with our constitutional authority.
QUESTION: So Queensland developers will be able to donate to the State LNP for a Federal election?
MATHIAS CORMANN: We are making sure that federal laws regulate federal elections. That is very simple. State laws regulate state elections. The flip side of your question is should state law be able to override federal law in relation to federal elections and we would say no.