After a century of bludging off the rest of the country, Western Australia finally has something to offer – and, through its cynical Liberal government, it is bloody well determined to keep it for itself. Screw the rest of the country:
ONE week after Wayne Swan proudly declared we would be “back in the black” by 2012-13 – with a projected $3 billion budget surplus – more than half the surplus has been stolen by the West Australian government.
By increasing the royalties on iron ore, the state government hopes to raise an extra $1.9bn over three years, punching a hole in the federal Treasurer’s all-important surplus target. It’s good for the Barnett Coalition government’s budget bottom line, but shocking for federal Labor’s.
And the only thing the rest of the country can do – adjust federal payments to WA to compensate – is apparently political poison for Labor:
This final option would guarantee that Western Australia was a political write-off for Labor. It could even cause the existing three federal Labor MPs in the state problems in retaining their seats at the next election.
And the state Labor Party might take aim at federal Labor, causing further political pain for Julia Gillard.
Actually, in a rational world, the rest of us throughout the country would be “taking aim” at the federal Liberals, who are standing by their WA state colleagues as they try to screw over the rest of us. Oh, so WA Liberals are going to win some extra seats and join their colleagues in the federal parliament, as a result of stuffing over voters in NSW, Victoria, Queensland, Tasmania, South Australia and the territories? And that’s something that doesn’t bother us?
Where are the media questions asking Tony Abbott if he supports his Liberal colleagues seizing a couple of billion dollars from the rest of us? Will the Liberals throughout the rest of the country stand against this outrageous action by WA, or will they giggle and take advantage of it at the expense of their own electorates?
Do the rest of us not care when Western Australia and the Liberals try to take us for a ride?
Moved On 
Sorry Jeremy, but each state government has the right to impose royalties on the resources within that state under our Constitution, Barnett is doing nothing untoward here.
Perhaps Gillard and Swan should have held some negotiations with him before announcing their calculations for 2012-13…It may have saved them yet another embarrassment.
As to withholding a percentage of WA’s cut of the GST take, I believe there may be an obstacle or two within the laws around that as well.
And under the formula used to calculate Commonwealth funds for the States, it takes into account the relative economies of those states – which is why WA benefited throughout most of Federation, when we propped it up.
So if it wants to take that money directly, fine – we’ll just recover it.
And if it wants to make this a Liberal vs Labor issue, where the Liberals are the pro-WA party, then fine. The rest of us can let them know what we think of that.
If the media even tell us it’s going on, of course.
You and I must have a different definition of “untoward” Gavin.
Labor should call WA’s bluff and refuse to count the royalties as a credit against the federal mining tax. When the mining companies go mental they can simply be pointed towards the WA Liberal Government, since they are the ones who have changed the playing field.
I’m sure our conservative media will support the miners in their campaign against the threat posed by these royalties.
Its only what, a couple of billion dollars?
Let the Western Australians have their royalties and their inferiority complex. They’re sure to come crying back to the Feds demanding their regular diet of subsidies as soon as the terms of trade boom eases off even slightly.
Its not worth the political fight for Gillard and Swwan at the moment; there are easier ways for them to preserve the surplus. One day, a federal government, Labor or Liberal, will forge a more sensible MRRT revenue sharing deal with the states. Its not going to happen in this term, and its more important to focus on getting the tax and other reforms implemented at all.
Is this one of the cases where “Opinions expressed on the blog do not in any binding sense represent the views of … the author himself”?
Because if they do, you’re being remarkably disingenuous. Nobody in WA minds the pot being shared out a bit more equally – even old Barnett only wants the GST share capped so that it doesn’t fall below 75% for any State. But the Federal government (of both political persuasions) has been chipping away at WA and QLD far more than they did to other states historically when the positions were reversed.
The original mining tax might possibly have been a sensible tax, economically, which the current iteration (as approved by the big mining companies) certainly isn’t. However, it was definitely an attempt to centralise profits from mining and take revenues from the States and redistribute them. Which might be fair enough to a certain extent, if you don’t think about all the years NSW, say, was profiting hugely from coal-mining and kept that to itself. It’s just a little too convenient that now that the rich states are the less powerful ones that’s when the Federal government is all keen on everyone profiting equally.
I don’t hold any brief for Barnett. I don’t necessarily think this is the fight to fight and it’s not a fight he can win, but don’t claim that he’s completely unjustified in being annoyed that WA is getting less and less of a share of GST, when the calculations do not take into account that it’s a large, low population density land mass that requires a lot of infrastructure per head of population.
” if you don’t think about all the years NSW, say, was profiting hugely from coal-mining and kept that to itself”. Strong comment Trillienm. Can you outline how NSW managed to do this?
I disagree Jordan, Gillard is on dangerous ground and it’s very tricky politically. Quite simply the libs have hatched a cunning plot and with the forces of Murdoch against Gillard it is a tricky one. If she takes the dosh back via GST all of WA will want to split off from the country (as per trillenn’s comment). But the alternative as you recommend is even worse IMO. She can’t be held hostage and burn $2B. This has Abbott’s hands all over it and it strikes at the weakness of rushed poor policy design. Where’s Tanner when you need him?
So where are all the outraged conservative types bemoaning the destruction of the mining industry by an increase in taxation??
Blimey, gordicans, and you reckon my comment was strong – Barnett might sometimes be an out of touch right wing idiot, but he’s not Tony Abbott’s lap dog. Where’s your proof Abbott orchestrated this, and for that matter, could Abbott orchestrate his way out of a paper bag?
As to the coal-mining NSW thing- I got that from my father. It’s his subject, and he usually knows what he’s talking about, but, no I don’t have proof on hand, or the time to research properly. I did have a quick look at the history of coal mining in NSW and found references to the NSW government benefiting, and none on the federal government, but I’ll freely admit I didn’t check enough sources to completely rule it out. Do you have proof NSW did kindly take large chunks of their royalties and offer them to the other states? Or that they negotiated such a deal as this one to limit further state government profits when their mining revenues were highest? Because I was under the impression that this deal is new.
The point was that these payments have previously gone to the states, and it isn’t unreasonable for states who are in danger of losing traditional sources of revenue to other states, who in their day kept control of this kind of revenue, to protest.
WA isn’t just mines, it also produces more agricultural wealth than any other state.
I don’t see how you can complain that we propped them up for generations, and then attack them for complaining that they prop us up now.
“I don’t see how you can complain that we propped them up for generations, and then attack them for complaining that they prop us up now.”
I didn’t complain about us propping them up. I’m pointing out the hypocrisy of them being propped up and then complaining about it in return now.
“So where are all the outraged conservative types bemoaning the destruction of the mining industry by an increase in taxation??”
Exactly.
I didn’t complain about us propping them up. I’m pointing out the hypocrisy of them being propped up and then complaining about it in return now.
Well, it’s easy to complain about things that happened safely in the distant past, rather than what’s happening now.
(Full disclosure, I live in Melbourne and will die before I ever go back to WA but you can take the boy out of the country etc.)
“Well, it’s easy to complain about things that happened safely in the distant past, rather than what’s happening now.”
Who’s complaining about things that happened safely in the distant past?
its certainly within WA’s rights to increase the royalties, just shows up what a terrible, unworkable deal Swan and Gillard made when they guaranteed to reimburse and increase from the states. What on earth where they thinking?
It does however show the complete hypocrisy of every commentator or politician who was barking like mad this time last year that an increase in tax or royalties to the miners would ruin them but now they seem perfectly fine with the state liberals doing just that.
Trillenm, of course I don’t have any proof Abbott orchestrated this but his damn fingerprints are all over it. We need to sort these uppity western asutralians out quickly. Firm but fare is the best approach. Send troops over to WA and give these ungrateful bastards a taste of some good old fashioned lead, restore some order and get some well bred types from the east coast to get the mines and things under control.
i mean fair
I’m really looking forward to Twiggy Forrest mounting another Rolex Revolution in defense of his poor little harassed company.
Where do we send donations?
Cheers.
But the Federal government (of both political persuasions) has been chipping away at WA and QLD far more than they did to other states historically when the positions were reversed.
Trillien – do you have anything at all to back this statement up or are you just asserting it because it “feels” right?
Unless you have some actual evidence then it would appear that your entire argument rests on a very shaky assumption.
Obviously we do have a different definition of “untoward” Mondo — Barnett has done nothing he isn’t entitled to do under the Australian Constitution.
“When the mining companies go mental they can simply be pointed towards the WA Liberal Government, since they are the ones who have changed the playing field.”
Unless you can point out where he has acted illegally or prove that he has increased WA’s royalties take in order to somehow deliberately torpedo Federal Labor’s budget predictions, I’d suggest my definition is closer to being correct than is yours.
As I said in my first post — perhaps Gillard and Swan should have talked with Barnett about his plans regarding royalties before announcing their budget surplus forecast to the rest of the country.
Jeremy,
The formula for Commonwealth funds is calculated based on the economy of each State at the time of calculation, I doubt there is any scope in the regulations surrounding it for the Feds to recoup past funds paid out because a given State is suddenly experiencing an economic boom at the moment.
However, I stand to be corrected on that point if you can present evidence to the contrary.
Yeah, a pleasant chat with the WA premier prior to every Federal budget would definitely resolve this issue. I mean we are in the era of the kindler gentler politics or whatever it is, right?
I also doubt it.
But I’m sure that won’t stop the Feds cutting every discretionary payment to WA that they can to preserve their own budget, if they decide that’s the best political strategy.
“Yeah, a pleasant chat with the WA premier prior to every Federal budget would definitely resolve this issue. I mean we are in the era of the kindler gentler politics or whatever it is, right?”
A conversation with Barnett may at least have given the Feds a better idea of what he had planned Jordan, which in turn may have led them to revising their budget numbers instead of rushing out with a public announcement that may or may not now be achievable.
I’m not sure its unprecedented for our Federal governments to consult with the various State governments before they calculate their budget.
And it may have just given the opportunity for Barnett to time his grab on the Federal surplus even better. Or maybe provided him with some juicy details from the Federal budget to leak to the press.
I can prove it.
He knew with certainty that he was increasing a tax that would be refunded out of federal government revenues (and has known that for a long time). He increased that tax. Presumably, he intended to increase the tax. Thus, he deliberately performed an action which he knew with certainty would transfer funds from the Federal budget to the WA one. Q.E.D.
Now of course he may have had other things on his mind well – indeed I’m sure he did. And maybe he’s such a thorough hypocrite that despite arguing so vociferously against any sort of efficient mining tax being implemented, he really been planning to raise this far more inefficient tax for a lot longer than the MRRT has been on the table. Still, I’m prepared to call this for what it is, a rather pathetic piece of political brinkmanship that is in fact likely to be pointless.
If he’d really wanted to achieve something more substantial than a headline, he would have liaised with the Federal government about giving up his lousy royalties that the mining industry hates so much in exchange for a proportional share of the MRRT revenues collected from his state. This is what should happen in all states, and hopefully will happen eventually – it’ll be better for the states, the federal government and the mining industry. But I don’t think the current environment is very condusive to federalism that co-operative…