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UWA Business School

Western Australian Premier Colin Barnett has re-affirmed his willingness to stand up to the federal government, saying that Australia's political system has become duplicative and counterproductive.

In a speech delivered at The University of Western Australia Business School on 2 September 2010, Mr. Barnett said that an accumulation of decisions and practices had led to the Commonwealth's powers increasingly impinging on state areas of responsibility.

‘I don't think I'm being parochial or self-interested when I say that the trend of decisions over the last hundred years in activities has seen more power, more money, more influence shift toward the central government in Canberra and away from the former colonies, the now states,' said the Premier.

‘We now find the Commonwealth very active in areas like education - not only tertiary, but getting more involved in primary and secondary education, getting heavily involved in health, even now becoming involved in issues like urban planning, environmental assessment and the like. In fact, there is now almost no area of state government policy that you now do not see an overlap of Commonwealth programmes and Commonwealth expenditure.

‘I think that comes at quite some cost to Australia and indeed that our arrangements have become duplicative, overlapping and conflicting.'

Mr. Barnett cited the Council of Australian Governments (COAG) as a prime example of these conflicting arrangements. Although acknowledging COAG as a sensible part of a federal system, he argued that it has become a quasi-level of government within Australia. Mr. Barnett noted that COAG now approves policy and receives submissions from interest groups, all without being directly accountable to the public.

Agreements on health policy at the April COAG meeting, said Mr. Barnett, demonstrated the way in which the balance of power has become tipped in the Commonwealth's favour. After prolonged negotiations, all states except WA agreed to hand responsibility for the funding of hospitals to the Commonwealth, in return surrendering one third of their GST revenue.

It all comes back to money. Currently, WA receives 68 cents in the dollar back from the GST revenue it generates. Within three years, Mr. Barnett expects this figure to drop to 55 cents. In comparison, NSW receives 95 cents, Victoria 94 cents, and Queensland 91 cents. It is a gap that is too wide, argues Mr. Barnett, suggesting instead that a floor of 75 cents in the dollar needs to be introduced.

‘The financial arrangements as they stand today are in my view failing, and failing significantly. The more successful we are as a state, the more heavily we effectively get taxed,' explained Mr. Barnett. The Premier defended his decision not to sign the national health agreement, explaining that while WA would miss out on $80 million each year in additional funding, this figure represents only a fraction of our total health budget. ‘If the states agree to that [the quarantining of one third of GST revenue], in my view, they are giving away their future financial independence, their ability to make decisions as a state, as a people,' he said.

It is an independence that seems to suit us. WA currently funds the entire cost of new hospitals, in addition to supplying 65 per cent of the ongoing cost of running major public hospitals. It's an investment that we can afford, but - so the argument goes - only because we have worked hard to achieve strong growth in our economy. ‘Without doubt, Western Australia is the world's leading mining economy. No one else comes close in the range of projects, the scale of production, the level of investment,' stated the Premier.

It's a claim supported by the figures. WA is home to $70 billion worth of mining and petroleum projects this year, and the Premier estimates that another $170 billion worth of projects will come into existence over the next five to seven years. The state is responsible for 66 per cent of Australia's total exports to China, 40 per cent of the nation's total exports to India, and one third of exports to Japan. So strong is the state's economy that Mr. Barnett last year spent nine days in China, meeting with high-ranking government officials and business leaders.

While Mr. Barnett's speech was not a call for secession, it was a reminder that Western Australians shouldn't underestimate our importance to the rest of the country. It is a sentiment that will further strain the relationship between the WA and federal governments. With the recent election of a Labor minority government, Mr. Barnett has predicted that we will see the ‘most left-wing government in our history on both social and economic factors.'

In addition to reiterating his refusal to sign the national health agreement, the Premier also expressed disappointment that the Mining Resource Rent Tax (MRRT) is likely to go ahead. ‘What we'll see is attempts to slow down the growth on the WA economy,' he said. ‘The latest version [of the MRRT] was to tax only coal and iron ore. The Greens have made it clear they want to apply that tax right across the mining industry. I expect to see the gold industry, alumina industry, the nickel industry all to be taxed and that has immense implications for investment and long term employment in this state.'

Of course, not everyone will agree with the Premier's pro-development views. On the day of his speech, he was heckled by protesters angered by the decision to approve an underground coal mine near Margaret River. For Mr. Barnett, however, it is all part of the job. ‘Most people dislike politicians,' he acknowledged. ‘We're sort of down there at the bottom of the tree.'

Whatever your views, you cannot deny the Premier's determination to fight for representative democracy and what he perceives to be WA's interests. The novelty of a federal minority government may produce a cacophony of voices, but one thing is certain - WA's voice will be heard loud and clear.

Media references

Heather Merritt
Director, External Relations
UWA Business School
T: +618 6488 8171
E: [email protected]

Verity Chia
Communications Officer
UWA Business School
E: [email protected]