Monday, May 19

Strong arm tactics with states not the way

Below is my letter which was published in the Australian Financial Review today.

In “States have every right to be screaming”(AFR, May 15) Laura Tingle identifies the disaster for the states of federal budget cuts of $80 billion in funding to schools and hospitals, forcing them to either cut services or increase taxes.
There are good reasons to have a conversation about reshaping tax-sharing arrangements with the states but that requires consultation, not strong-arm tactics, which alienates state premiers.
The fact Abbott has further announced he is willing to negotiate aspects of the budget to get the measures through the Senate illustrates the lack of any prior consultation beforehand within the Parliament, which may have improved overall outcomes.
This piecemeal approach contrasts markedly with NZ, which has just announced a $NZ372 million ($342 million) budget surplus for the year to June 2015, reaching $NZ3.5 billion in 2017-18 as a result of increases to its GST. Its budget provides for increases in health and education, and the whole exercise was only completed after widespread consultation within the party and the electorate.
Before the election Abbott foolishly ruled out any change to the GST, stating any future changes envisaged would be taken to the next election.
But this approach necessitates consultation with the states, particularly if funding to education and health services is to be cut, necessitating a rise in the GST.


susan said...

That truly is a shocking announcement to make with no forewarning whatever. I'm quite staggered that they felt they had the right, either moral or legal, to do such a thing.

The NZ plan seems to have worked well. Is there any reason you can think of that Abbot's government didn't follow suit?

Lindsay Byrnes said...

Hi Susan,
They claim such a right on the basis the Commonwealth does not “run”’ or own hospitals or schools and the States, who are responsible for governance in these areas, can simply increase their State taxes to make up for the shortfall.

This is an arrogant approach and it is hardly surprising State Premiers are furious.

But I think the idea was more to do with the States reacting by asking (beg) the Federal Government to increase the GST, so they can top up their share from the increased pot, allowing the Federal government to sheet home blame for the increase to the States.

You can imagine how the elected Premiers feel about that!!

A more conciliatory approach will need to be taken.
Best wishes

Gary said...

Australia and Canada continue to share threads of history. Right now we both have governments who operate without consultation, attack any opposition and base their actions on decision-based evidence making.

I fear we will need to change them both before we see anything responsive or collaborative in the least.

Oh...all the best to you my friend...wish we could sit on your patio and discuss this stuff! With Susan too :)

Lindsay Byrnes said...

Hi Gary.
Thanks for your visit and I concur with everything you mention !!
Best wishes