Horizontal fiscal equalisation
Submissions received for the Horizontal Fiscal Equalisation public inquiry.
When you have finished the inquiry and recommend what is a "fair" distribution of the GST to all States and Territories, could you please explain the "fairness" in plain English so that the average voter can understand how the distribution of the GST is in fact "fair" to all. Please do not hide the fairness (or otherwise) behind a mass of technical financial and economic jargon which would leave most people totally in the dark. i.e. not only must the recommended distribution be fair but also clearly seen to be fair. thank you
After researching the ownership of the Minerals in Australia I have found that the minerals are owned by the state this is enforced by Statue of Law, this would imply that by including the royalties into the Federal GST Breakdown is in contravention of the Statue of Law as this means all the states are receiving the royalties of these minerals which are not from the state that owns the mineral. By including the Mineral Royalties in the HFE leads to other states taking a share of the proceeds raised by the Mineral Royalties without contributing to the expense in developing the infrastructure spent by the state. It should be noted that the act of mining actually contributes a great amount to the GST revenue through the payments of GST on their operational invoices as there is a large turnover of goods and services which incur GST. It should now be noted that Queensland considered reducing the Mining Royalty to be applied to the coal from a potential Coal Mine which then makes a mockery of the Mineral Royalty inclusion in the GST Funds Distribution Calculations (Horizontal Fiscal Equalisation) as this reduces the amount included in the HFE calculations so they would be subsidised by other states. The Australian Constitution states that consolidated revenue (of which GST is paid from) shall be debited to each state based on the number of its people, this ensure that the Horizontal Equalisation is not discriminatory as per the requirement of the Australian Constitution. In addition the Australian Constitution states that the distribution of the funds in the consolidated revenue is only based on funds raised by the Federal Government which means including funds raised by states is unconstitutional. In including the Mineral Royalty in the GST Calculation it is also imposing a tax on the State Asset which is contravention of the Australian Constitution (114).
Surely 75% of GST could be allocated on a per Capita basis. The balance used as a equalisation fund and State share reduced by any levy or tax it placed on a national resource such as coal or iron ore and this be also placed in the equalisation fund.
Regarding question 1d of the guidance note Does the current HFE system influence State policies to facilitate, restrict or tax the development of economic activity, and in particular energy and mineral resources? In the light of the current political debate and the treasurer's stated position regarding promotion of coal and coal seam gas extraction this appears to be aimed at forcing the states to comply with the federal liberal party's ideology and position. I strongly object to the use of the HFE process being used to force changes to legislation by democratically elected state governments, which must consider many factors including social and environmental concerns besides financial.
How the current GST dispersal of monies is allocated and the ultimate responsibility of terms of reference does not seem explainable by the Treasurer or the members of the Commission itself. There seems to be little belief of fairness in this system by Western Australians. Our WA civilians are discriminated against by a system which rewards those states that have moratoriums on their exploration of commodities. It does not appear to create incentives for other states to exploit natural resources - but instead seems to produce a "welfare" mentality permeating across all other states. Our commodity royalties are supposedly protected within the Federation and the Constitution to be the property of the state. The current GST system appears to be redistribution by stealth of our royalty income. We are constantly being pushed into a budget deficit because we have our own income taken from us - and then to add insult to injury - we are given a handout by the Federal Government and then told how grateful we should be. This system is imposing debt on our state that will be borne by our children and grandchildren for generations to come. WA will reach a point that we will never be able to pay down the debt owing and will only be servicing the interest - and yet other states are posting surpluses. The Commonwealth Grants Commission seems to fail to understand the vast distances involved that the state government needs cover to provide services to citizens. The current GST allocation then replicates this denial of need for our state and then discriminates against every single citizen living here. We in WA are being told to expand gambling - in turn taking money from those that can least afford it - how can that be a moral or ethical solution - but the gambling royalties from the other states are ignored. Why are those people that live in WA valued so much less than those people in other states? This system is causing resentment and angst in WA.
To the extent that the Federal Government seeks to tie the distribution of GST to the issue of unconventional gas exploration and fracking as reported in the Australian, I would like to add my voice to the extreme concern such a move should generate in all Australians. As a matter of economics, it seems severely flawed. There are ample existing gas reserves in Australia and logically gas will be most economically extracted from the areas where it is more favourably received - as has been evident from the Queensland experience. As a matter of science, it is far from resolved that fracking does not have long term environmental consequences in sensitive areas and in particular in sensitive underground aquifers. In Queensland the initial understanding of the underground geology and hydrogeology was completely wrong in some areas – e.g. aquitards that were initially considered "impermeable" have later been shown to be different and/or have fissures etc / initial EIS documents by Arrow indicated the Condamine Alluvium, a vital water source, was separated from the relevant coal measures only to later be accepted as sitting within them in parts. Further, the regulator in Queensland has proven completely inadequate (including as to funding) to be “ahead” of industry developments and/or is significantly constrained by the lack of ability to impose disclosure on the part of operators. No comfort can be taken from the role State regulators are able to play, unless they are adequately funded and completely independent of Government influence. In short, until there is far more scientific evidence available, a precautionary approach must be adopted in sensitive areas and it is completely inappropriate to bypass sensible precaution by economic threats. As a matter of social conscience, it is repugnant for a Commonwealth Government to effectively impose its ideological agenda on a legitimately elected State Government with a different ideological or political approach.
|7||Janet Cavanaugh||Please accept this as a late submission to the Horizontal Fiscal Equalisation inquiry. I note that the terms of reference include specific reference to “State laws and policies restricting the development of energy resources.” This is curious, given that the states have the constitutional right to impose these laws and policies. There are several reasons why such laws and policies may exist. Key among them is protection of our water resources, including groundwater supplies. In the driest inhabited continent, protection of water needs to be paramount in all natural resource management decisions. Other key reasons why there may be restrictions on developing energy resources is climate change. We need to move quickly from a fossil-fuel dependent economy if we are to avert the worst excesses of climate change. Unconventional gas (tight sands gas, shale gas and coal seam gas) comes with a significant risk of increased greenhouse gas emissions compared to conventional gas. This is due to the different extraction methods required which involves fracking and numerous smaller well-heads. We also need to phase out the use of coal to generate electricity and invest more in clean energy sources. Due to a future, warming climate, Australia will likely face major ecosystem collapse and loss of major tourism income streams (from, for example, the Great Barrier Reef). I believe it is unacceptable for the Federal Government to impose policy demands on the States and Territories in exchange for the GST revenue that funds our schools and hospitals, and that replaced previous existing state revenue streams. The GST must be distributed on a fair and objective basis to fund basic services needed by communities, and should not be used as a tool to blackmail states and territories into accepting invasive gasfields against the will of the voting public.|
|8||Wealth Wisdom Pty Ltd||One important point that everybody seems to have missed. In the absence of a better GST deal, Western Australia could simply change the Royalty rate from 7.5% to 0.75% - with a 2% "charity" donation such as to telethon instead(to fully fund Ambulances etc.) This would elevate WA to 100% GST share, provide a better benefit to WA financially than the current system, and effectively eliminate the $5 Billion Royalty sharing from WA everybody is proposing continues. Before determining the the current system is fine, as all States and Territories contend, consider the impact of a solution such as, or similar to the above. It is not in the "National Interest" - but it would solve WA's low GST share and it is within the power of WA to do this.|
|9||Submissions on fracking and GST distribution||
The Commission has received a large number (5600 plus) of email submissions from private individuals expressing opinions on fracking. The submissions were received via a campaign platform, and are essentially identical.|
To aid transparency, the text of the template submission is reproduced below. Due the large volume of submissions, it is impractical to list the names of all the individuals who put their names to such submissions.
These submissions are providing a valuable source of information about people's views on matters raised in the terms of reference for this inquiry. They are being considered by the Commissioners and staff, and will be drawn on in the preparation of the draft inquiry report.
To the Productivity Commission,
I’m writing to make a submission to the Horizontal Fiscal Equalisation inquiry because I believe it is unacceptable for the Federal Government to impose policy demands on the States and Territories in exchange for the GST revenue that funds our schools and hospitals.
Many states have introduced moratoriums or even outright bans on unconventional gas and fracking in response to growing evidence that these activities are fundamentally unsustainable and harmful to community health, water resources and the future of rural communities.
This is entirely consistent with the States’ and Territories’ constitutional responsibility to manage natural resources and protect water resources and the environment.
Forcing the states to allow fracking in return for GST would be an extraordinary and unwarranted intervention in state affairs, and would create a real risk of contamination and depletion of irreplaceable groundwater.
We consider this to be a case of the Federal Government trying to blackmail state governments in a bid to promote the activities of multinational fracking corporations. It is an unethical step.
Victoria, Western Australia and the Northern Territory have done nothing but what they were elected to do.
Anti-democratic intervention by the Productivity Commission or the Federal Government to force unsafe unconventional gas mining or unsustainable coal mining onto our communities will not be tolerated.
The GST must be distributed on a fair and objective basis to fund basic services needed by communities, and should not be used as a tool to blackmail states and territories into accepting invasive gasfields against the will of the voting public.