Sort It Out: Ridiculous GST Posture Could Finish Abbott

A RIDICULOUS SUGGESTION by Tony Abbott — that the states should “sort out” how GST revenue is carved up — shows to an appalling lack of leadership; with a risky budget due shortly from a Treasurer whose record in the job is poor, Abbott’s GST gaffe could yet sound the death knell on his leadership of the Liberal Party. ALP “leader” Bill Shorten, meanwhile, deserves to be crucified for typically filthy point scoring that is bereft of alternative ideas.

First things first: I have, as readers know, been a staunch supporter of Tony Abbott’s for many, many years, and have mostly defended him to the hilt in this column in the face of almost unprecedented levels of unpopularity, dysfunctional in government that apparently nobody is responsible for, relentless and unjustifiable abuse from the Left, and — most importantly — own goals from his own boot or worse, things he says that on reflection, simply, he shouldn’t.

That defence is getting more difficult to maintain.

This morning we looked at the scathing attack launched by Peter Costello in Sydney’s Daily Telegraph on management of the federal budget by Treasurer Joe Hockey, but through the prism of a constructive way forward on both tax reform in Australia as the way to address the (valid) criticisms made by Costello.

What a difference half a day or so makes in politics.

Tony Abbott’s unbelievably crass assertion that because the GST is a tax that “belongs to the states,” “grown-up adult” state governments should “collectively…make a decision” shows an appalling lack of leadership at a time he and Hockey should be trying to get control of the government’s economic management responsibilities ahead of a make-or-break federal government, not abrogate those responsibilities in favour of the states.

The fraught issue of how to distribute GST revenues has reared its head lately on account of recommendations from the Commonwealth Grants Commission that Western Australia’s share of the tax should fall to below 30 cents in every GST dollar raised in that state; for some years — courtesy of the impact of the mining boom in WA, and the windfall it has received from mining royalties — that state’s share of GST monies has fallen, offset by royalties receipts, with the difference being redistributed to the so-called “mendicant states” (read: South Australia and Tasmania) whose economies are too small and weak to sustain their bloated bureaucracies and deliver an acceptable level of government services to their constituents.

It’s become a tug-of-war: larger states capable of raising more revenue in their own right (but which nevertheless face a backlog when it comes to infrastructure requirements and the funds to deliver them) increasingly resent handing money away to “mendicants” that should be swimming in money, but are so addicted to the torrent of tax revenue they receive that it’s spent each year before they even get it.

The big states increasingly resent giving away more and the “mendicants” refuse to countenance being denied a cent of it: a fire fanned, cynically, by Bill Shorten and his Labor cohorts, with their taunts that Abbott and Hockey will “rip billions of dollars” out of Tasmania and SA in a glib attempt to snooker the government and make it impossible for it to resolve the problem.

More on Shorten — and his fatuous rhetoric — shortly.

But for Abbott to effectively throw up his hands and walk away is a poor look, and one that does not befit a leader; for all the difficulties the government faces and for all the obstacles Labor seeks to put in its way, the issue of GST allocations is the government’s problem to fix: and a tart decree that the states can sort it out for themselves is an almost unforgivable lapse of judgement.

Perhaps — with an eye to the “strategists” and “tacticians” who populate the Prime Minister’s Office — someone thought it would be half-smart and a good idea to handball the whole matter of Commonwealth grants to the states; perhaps they thought the states would be wrong-footed. Perhaps they thought it would render them more pliable in any future discussion about increasing or broadening the GST rate. Instead, it seems merely to have encouraged them to dig in.

Or perhaps it was more prosaic: over a few beers, somebody simply decided that for once they couldn’t be bothered. Either way, it is not a good look.

I read an excellent piece on this issue by Judith Sloan in The Australian today, and Sloane notes that just as WA’s share of the GST revenues it generates is set to fall below 30%, South Australia’s is about to increase to 135%, and that state’s (Labor) Treasurer has had the nerve to try to blackmail the (Liberal) Abbott government against reducing his state’s allocations by suggesting that to do so would necessitate the end of Federation.

We’ll come back to that too.

But I tend to think that if Abbott’s view (or the view of the clearly brain-dead individuals who devised his GST stance in the interests of astute political strategy) is one the Prime Minister is welded to, then the resumption of public muttering over his leadership of the Liberal Party must be imminent; already I hear that far from being silenced by their failure to engineer a spill against Abbott, the mutterers for the time being merely retreated behind closed doors having been repelled, but by no means beaten.

Whether he likes it or not, the Commonwealth Grants Commission is a federal body answerable to the federal government and responsible for (in this case) apportioning the share of GST revenue each state receives. Perhaps a public conversation — or argument — to till the ground and win over voters to the case for change might better serve Abbott’s government in this regard.

But such conversations have proven not to be the Abbott government’s forte. Winning arguments of this nature have proven next to impossible. And not because there is no case to be made, or because the arguments cannot be won, but for the deadly reason that the wrong people in the wrong jobs are the ones charged with making and winning them.

In a few weeks’ time, Hockey will deliver his — and the government’s — second budget; bugger this one up as badly as he did the first, and Hockey will have signed the government’s electoral death warrant, and it won’t matter whether Liberal MPs manage to dump their leader or not (although you can bet your life they will do it: faced with electoral doom, these days dumping the leader is fashionable, and rhetoric about “not being Labor” won’t stop it a second time from happening).

And I find myself questioning Hockey’s sincerity about GST reform just hours after remarking that it was “refreshing” that he at least put it on the table: one has to wonder whether talking a little about the GST is intended to make the government appear serious about economic reform, trying in the process to extract some mileage from the Liberal Party’s traditional reputation as the party best suited to manage the economy — just to set the scene for Abbott to come along behind him and declare, in effect, that it’s all too hard.

I have two points to make.

One, that GST is merely presenting as the latest in a long list of issues that point to the states having completely outlasted their use-by dates; perhaps their abolition — reaping savings in the tens of billions of dollars — and the disbursement of monies from a central government to a decentralised network of local provincial authorities on a per-capita basis or something very close to it, would resolve this idiocy of who gets what, on what basis, and who wins at whose expense.

After all, the only real role the states perform these days (aside from the digestion of billions of dollars duplicating bureaucracies) is to play themselves off against each other, and — depending on their political complexion at any given time — act either to antagonise the government sitting in Canberra, or to “stand up” to it to extract more money that is, usually, spent with no regard for accountability or for any tangible benefit.

And two, it is about time the contemptible specimen charged with “leading” the ALP is crucified by the mainstream press, and ripped into so many pieces that a sparrow wouldn’t fill its beak at a peck; as usual, Shorten has been out name-calling and landing tawdry cheap shots over the conundrum Hockey (in particular) finds himself in: unable, through political reality (largely formed at the hand of Labor and the Communist Party Greens in the Senate) to overhaul the GST (or much else), but more or less doomed to fail as Treasurer unless he somehow manages to do precisely that.

Hockey, like Abbott, and like the lackeys who serve them who were recruited primarily for compliance and not performance, deserves censure for his performance as Treasurer since assuming the role, and I have been more than fair (lovely term) in handing out criticism in this column where it is due in the case of the Coalition.

But Shorten — seeking to be taken seriously as he twists the knife in Hockey — should be given no quarter.

Labor presents no alternative vision for economic reform; it refuses to even acknowledge a problem with the budget, let alone that that problem is its own fault and responsibility.

Shorten’s ideas (when he has any) are vague, vapid, contradictory, and the few that can be pieced together at all — like the half-arsed plot to unilaterally abolish the private health insurance rebate — would cause monumental crises in public service delivery, and in that particular case, the collapse of the healthcare system in this country.

Shorten is no leader, and whilst Abbott and Hockey might have their problems, Shorten has been allowed to behave like a schoolyard smart-alec — but without the inevitable smack in the face such conduct invariably (and justifiably) elicits out in the sandpit.

Abbott might be flirting with his tenure as Prime Minister, and Hockey with the government’s electoral mortality.

But if the media simply stopped reporting the puerile rubbish that passes for Shorten’s contribution to policy debate, he would be neither seen nor heard — and maybe, if that happened, his parliamentary colleagues would realise the liability they saddled themselves with 18 months ago, and sign a petition for his removal.

60% of them, anyway. After all, that was the threshold set down by Kevin Rudd, in the confident expectation it would never be breached — or at least, not until the next guy came along.



4 thoughts on “Sort It Out: Ridiculous GST Posture Could Finish Abbott

  1. Oh dear, as usual Shorten is indulging in typically filthy point scoring against the beloved PM and Treasurer. Grow up, Yale – that’s what the opposition is supposed to do, your blog is starting to read like an episode of Home and Away.

    • Shorten sets low expectations and fails to achieve them. He couldn’t lead a unionist to a free lunch at maccas. He is as useless as an ashtray on a motorbike. Abbott might be a fool and a puppet of his string puller Peta Credlin, but Shorten is truly vomitous.

  2. Disappointing Yale! While your criticism of the government stance is more than justified and your prediction of Tony and Joe being shown the door is highly likely, your solution of more Federalism and removing the States is so wrong that you might get a job with Hockey! The States are Sovereign States and the Federation is an agreement between them. The tail (the Federal Government) has been attempting to wag the dog (the States) since the beginning. The Federal Government took over income tax in 1942 in exchange for a promise of Federal grants to streamline the war effort. The Feds have used the idea of “tied” grants since then to force the States to use the money as the Feds choose. This has been the excuse for having a Federal health department and a federal education department. Neither of these areas are Federal responsibilities under the Constitution. They could be closed today, their ministers and staff dismissed, and their budgets distributed to the States. Anyone who watched the Rudd and Gillard Governments and concluded that more federal Government was a good idea has rocks in his head!

    • I think you are missing the point Jeremy — the point is that politics in this country is become so toxic, so vapid and so brutal that the states themselves are being used as battering rams for partisan gain elsewhere: reread my remarks and you will find extreme exasperation, but not the outright advocacy of abolition of the states.

      Even so, to abolish them would solve quite a few problems (the political savagery to some extent as well), although even in a throwaway remark I was careful to emphasise that any “abolition” had to include the decentralisation and devolution of power to a local level.

      As it stands, the states rely on the Commonwealth for the overwhelming majority of the monies they receive (which includes the GST) and this trend will only continue; by all means talk about giving the states income taxation powers, but anyone who thinks this is anything other than a recipe for higher overall taxation (and direct taxation no less, which captures a shrinking component of the population base in relative terms) is kidding themselves.

      That’s why the cowardice over GST reform is so important: the one implement that could be used to fix things is no more than an explosive device being kicked literally from pillar to post in the political sense.

Comments are closed.