Labor’s Naive Dream Team Will Sell out WA on the GST

The essence of electoral politics is found in the points of difference that attract the support of swinging voters.

Sadly, the search for that winning edge has seen Australian politics mutate over decades into a slick marketing exercise based on needs-must deceptions.

Ideology — and the principles that flow from it — often runs second to focus-group policies that seek to give a party an electoral advantage.

But sometimes, ideology trumps everything — common sense, natural justice and even self-interest.

Sarah Martin’s page one exclusive on Monday has exposed the Federal Labor Party’s outdated socialism as an affront to the wellbeing of West Australians.

Martin revealed that five female ALP Federal candidates would rather meet a welfare state ideal of “equal” GST distribution between the States than one that delivers a “fair” return to WA taxpayers.

This is an issue I visited many times on these pages last year in exposing the iniquities of horizontal fiscal equalisation and the way it has been used as the bulwark of a national welfare state by the Commonwealth Grants Commission.

Martin’s report vaulted the arcane arguments about the way HFE delivers billions of dollars of hard-earned WA tax receipts to States that are bludgers and landed on the realpolitik.

And it’s this for WA Labor: who do you represent?

The five WA Federal Labor candidates showed stronger support for a GST system providing handouts to other States than they did for returning to West Australians a fair amount of the tax Canberra takes every time we make purchases.

The female “dream team” slavishly followed the Federal Labor leader’s glib offer of a $1.6 billion stopgap payment rather than fix a broken system that punishes WA for its success.

Three of the five showed little understanding of the underlying problem in their reported comments and only Swan candidate Hannah Beazley left the door open to the need for real reform.

“I think WA needs more,” Beazley said. “I think we deserve a fairer share for WA.”

That one glint of sunlight aside, it is now patently obvious that Labor will not fix the broken system. It is offering a bandaid to get through the next election campaign.

There isn’t — and can’t be — any guarantee that those payments will continue while WA’s share remains at unprecedentedly low levels.

That is Labor’s fatal flaw.

The apparent naivety of most of the five female Labor candidates that the GST system could be fixed by the Turnbull Government without their party’s assistance is not surprising. Federal Labor has adopted a dog in the manger approach to the need for real reform, at one moment blind to the inherent unfairness, at the next throwing top-up cash that doesn’t fix the real problem.

The truth is that Labor likes the HFE system — which operates in an extreme fashion not adopted anywhere else in the world — because it embodies the socialist ideal of redistribution of wealth. And nothing kills human enterprise faster than that.

But, as noted in this column in October, the CGC only adopted “full” equalisation of payments between the States relatively recently. In doing so, it created windfall gains for some States that get more money for doing even less.

That change also proves that adopting “partial” equalisation — which is what the Productivity Commission effectively proposed in its interim report — just reverses an earlier error.

And proper reform is far superior to the handouts the coalition has given WA in the past two years which Labor is now just mimicking.

It is interesting to plot Mark McGowan’s trajectory since Bill Shorten offered his $1.6 billion bandaid at Labor’s State conference in August. The Premier initially supported the Shorten proposal, but as the months went by and further scrutiny showed it went nowhere near the Productivity Commission inquiry’s solution, McGowan has gone cold.

He was flushed out last week by comments from Labor deputy Federal leader Tanya Plibersek that the Productivity Commission’s solution could not be supported because some States would lose out “big time”.

On the election trail in South Australia, she was asked if the Federal Government needed the support of the Council of Australian Governments to change the GST formula.

“It’s not clear that other States and Territories would have to agree,” Plibersek said. “And that’s one of the great problems with this proposal.

“If the Federal Government rammed through these changes, every State and Territory will lose, bar WA.

“Now, we know that WA does have a genuine problem at the moment and that’s why Federal Labor has said that we would put $1.6 billion on the table to invest in job-creating infrastructure in WA.”

It appears that McGowan has seen through that bribe and recognises it would not fix WA’s problems because he said he was “disappointed” in her statement. “Obviously the South Australian Premier and the Tasmanian Premier are desperately keen to ensure WA doesn’t get its fair share, but we’re prepared to put the arguments anywhere that WA has been ripped off for too long and we want to see some change,” he said.

The truth is that both major parties face the same problem of creating winners and losers when they try to fix this mess.

Which is why they need to do it together.

It’s likely there will be a grab bag of single-issue parties contesting the next Federal election hoping to harness WA anger over the GST to win seats in the Senate. They will have no power to do anything.

The States will never agree among themselves, which means the only fix at a Federal level can come from agreement between the coalition and Labor. That’s the only way to get the required numbers.

And the Productivity Commission process is offering the only real solution for WA’s problems. Which leaves Labor with a potentially big problem in WA going into the Federal election — as Monday’s front page showed.