The Henderson Government should view Canberra’s threat to reduce GST funding to Western Australia as an attack on the Territory’s own mineral-rich economic base.
The Country Liberals Senator for the Northern Territory, Nigel Scullion, issued this warning as the Federal Labor Government threatened to breach a 78-year-old convention by directing the Commonwealth Grants Commission to punish WA for exercising its sovereign right to raise its rate of mineral royalties.
“The Grants Commission was established in 1933 as the financial safeguard of Australia’s Federal system of Government,” Senator Scullion said.
“It ensures that all States make adequate revenue raising efforts, and in return, that Commonwealth taxation revenues are distributed so that Australians living in all parts of the continent have similar levels of access to basic services.
That is why the first CLP Government insisted that the Grants Commission acted as the umpire for financial relations between Canberra and Darwin as a pre-condition of Self Government in 1978.
“The arrangement has served the Territory well, as the Grants Commission recognises the lack of basic social and physical infrastructure in the NT, and insists on much higher levels of Commonwealth funding on a per head of population level than it applies to developed States.
Senator Scullion said that this funding model is now under threat.
“For 78 years, Federal Treasurers of all political persuasions accepted the recommendations of the Grants Commission on funding levels for State-type services,” Senator Scullion said.
“Now Labor’s Treasurer, Wayne Swan, has threatened to direct the Grants Commission to cut the amount of GST funds to WA in retaliation for the Barnett Government exercising a basic State right under the Constitution by raising mineral royalties in last week’s Budget.
“Any State – or Territory – raising its mineral royalty rate as the Henderson Government did last year interferes with Canberra’s new tax on the mining industry.
“That is Canberra’s problem, as the new tax system was cobbled together last year by a desperate Prime Minister before she called the premature election. State and Territory Governments should not have to pay for yet another Gillard folly.”
Senator Scullion said the Henderson Government should take note of the warning to State and Territory Governments posted in today’s Australian newspaper by a nine-year veteran member of the Grants Commission, Professor Kenneth Wiltshire of the University of Queensland.
“The Gillard/Swan Government’s threat to reduce WA’s share of Federal infrastructure funding or cut its GST receipts is unprecedented, unfair and unbecoming,” Professor Wiltshire wrote.
“It ignores the fact that the Barnett Government’s actions are legal ones by a sovereign Government.
“This is no way to run a Federation.”
Senator Scullion said that if the Grants Commission is allowed to be used as an instrument of Canberra’s vengeance against an established State like WA, the Territory’s future funding model is at risk.
“The Territory has none of the Constitutional safeguards that WA thought it had, so our economy is even more vulnerable to the whims of Canberra if Treasurer Swan is allowed to tear up the Federal rule book in this way,” Senator Scullion said.
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110523 NT Government should not regard GST brawl as a spectator sport.pdf