Turnbull Turns Bull Dust

No, No, This Is Shit

Malcolm Turnbull's tenure as Prime Minister is turning into a cavalcade of bad ideas that get paraded, only be dumped or backtracked or diminished to the point of making no difference. All this expectation that somehow Malcolm Turnbull was going to prove to be a good Prime Minister has been eroded by months of these policy weather balloons he keeps launching. Most of the time these weather balloons seem to catch fire, and rightfully so because he's come up with some terrible ideas. These terrible ideas included the 50% hiking of the GST to chasing the estate of the dead for HECS debt.

Anyway, this week saw two more terrible ideas being floated by Malcolm Turnbull-dust. The first was the idea that States should be allowed to collect their own income tax. Not only is it historically retrograde, it doubles up on the tax collecting and is therefore inefficient and costly. Yet Malcolm Turnbull wants to do this because the Federal Government gets to cut income tax by 2%. It's really daft because it' predicated on this really stupid notion that the States ought to be competitive. Doing so would probably untie the States from their brethren as well as encourage the crazy talk of secession as well as drive Tasmania into the ground. This is supposed to be a commonwealth where all states are in it together - not a confederacy and a confederacy of dunces at that.

Because even blind Freddie can see that it would be a disaster, then you wonder why the vaunted intellect of Malcolm Turnbull ca't figure out this obvious problem all on his own. The answer that is that he doesn't want to see the problem because this suggestion is his cure to the problem whereby the Federal Government needs to increase revenue, while the stated goal of any Coalition Government is to cut taxes. Given the two contradictory imperatives, Malcolm Turnbull has decided that the Federal Government will cut taxes while hiving off to the States, the responsibility of raising revenues by collecting income tax. It is rather stunning in its gormlessness.

Concomitant to that bad idea is the notion that the Federal Government would get out of education and so stop funding public schools - but it will keep giving money to private schools. It rankles to see this is the headline after seeing Michael Moore's film two nights ago whereto Finnish eduction minister pinned their system's success to having no private education. That the Australian Government is trying to kill public education and make it entirely private is not only despicable and wrong-headed, it reeks of the sort of ideological nastiness that wasn't in Australian politics before John Howard. The fact that such idea balloons can even be floated for discussion shows a real lurch to the right by the Coalition.

Mike Baird - another practising class warrior for the right - was making noises on a doorstep soundbite that he welcomes Turnbull handing over the power to collect income tax and he supports these ideas; but really, how is it going to be any kind of reform if the macro structure of taxation is going to go back to World War II? Of course Turnbull is accused of doing a runner ahead of the COAG meeting, so chances are even this idea is going to die on the vine (thankfully) but it will eat up valuable air time to discuss proper taxation reform or education.

If there is any serious takeaway from all this, it is the obvious problem of Malcolm Turnbull being no less a class warrior for the privileged than Tony Abbott. As such, it is really hard to see why the swinging voter really should be giving Turnbull the time of day when he is setting things up to hurt them the most - because let's face it the 1% are not swinging voters.

GST Problem? We Don't Think So

Colin Barnett Should STFU

Pleiades set me a heads up about something in the AFR about Colin Barnett and theLNPmanagement of Western Australia. but before i get to that I need to set the stage a little.

At the recent COAG meeting, the premiers of states not called 'Western' were hostile to Colin Barnett's suggestion the GST distribution rules should be rewritten. It turns out the abrupt end to the mining boom has put a huge dent in the WA government's revenues. Worse still, the GST take for WA is going towrope from 38cents for every GST dollar collected, to less than 30cents. Which sounds rough, but here's the thing - WA was the chief beneficiary of an once-in-a-century commodity boom as it sat on top of one the great mining booms. And the other premiers lined up to let him know whether thought:

Premiers arriving in Canberra on Friday morning called for WA to accept the decision of the Commonwealth Grants Commission, which allocates GST revenue. 

"The Grants Commission made their ruling, not everybody's happy with that, but the notion that you would change the rules, that you'd get rid of of the umpire because you didn't like the decision and politicians are going to sit around a table and carve up the GST state by state, territory by territory, that's not going to happen," Mr Andrews said. 

NSW Premier Mike Baird said there should not be any "knee jerk" changes to the GST and said the most pressing issue was future health and education funding shortfalls.

"You shouldn't change the whole system for those single issues and certainly they have got the capacity to deal with it," Mr Baird said. 

"The biggest issue here is the health funding, the health and education funding. That quite frankly makes the GST debate that we are talking about right now look like a pimple to the size of a pumpkin." 

Queensland Premier Annastacia Palaszczuk said Mr Barnett's Black Saturday comments were "offensive" and that he should move on. 

"I just say to Colin Barnett, accept the independent umpire," she said.
"This is what the decision has been, no-one has gone against it for 30 years and there is absolutely no reason whatsoever to go against it. There's no way I'm going to cop Queensland losing $556 million."

That's pretty black and white. But here's the bit Pleiades sent from the AFR that's pretty damning:

So, how could WA manage to make it through a once in a century commodity price spike and still not manage to deliver a surplus? Easy. They spent a fortune subsidising the mining industry. 

Just last year the WA Treasury wrote to the commonwealth to explain how expensive it was to host the mining industry. Among other gems they wrote that "the cost of Western Australia's assistance to the North West Shelf project – e.g. payment of subsidies to the state's power utility to help cover the losses it initially incurred under crucial 'take or pay' gas contracts – is estimated to be around $8 billion." 

The WA Treasury goes on to criticise the Commonwealth Grants Commission for dividing up the GST revenues between states on the basis that "it fails to equalise many state expenditures that support resource development, particularly provision of infrastructure". They openly describe government decisions to pay for much of the mining industry's infrastructure as "a significant subsidy cost". 

The WA government has spent a fortune subsidising some of the world's biggest companies in the middle of a mining boom. Their own state budget papers show the cost to be around $6.2 billion over the past six years and their own Treasury calls such payments a subsidy. 

WA's tantrum at COAG, combined with Tony Abbott's tenuous grip on power, has reportedly delivered a $600 million windfall to Western Australia. Just imagine if Jay Wetherill or Daniel Andrews spent a few billion dollars subsidising the car industry. Would their industry policy decisions be cross-subsidised by the other states, or by the Commonwealth?

Ouch. Kind of shows how badly 'managed' (and I use the term very loosely) the whole mining boom was in WA. Basically, Colin Barnett took the mining revenues and gave it right back to the mining industry even though there was no reason to subsidise a booming industry. Instead of subsidising something that needed support during a time of a high dollar an over-dominant mining industry, Colin Barnett and his WA government went and doubled-down on the mining industry and effectively doubled-down on the Dutch Disease. Now that the moment has arrived, he's complaining his state has no income stream other than mining. You sort of wonder how he lives with himself.

The other state premiers are no saints either - they're simply talking along their lines of interests as is their prerogative; which is also true of Colin Barnett. But if you're an outsider of the process looking in, it's pretty obvious that Colin Barnett contributed greatly to his own states' predicament.