Mr Pallas (Tarneit) —  I refer  to the Public Accounts and Estimates Committee report on the 2013-14  budget  estimates,  which in  part  2, chapter  4.4,  discusses general purpose grants, their predictability and their impact upon the state  budget. On page 70 it  is noted that the  three main factors which influence  the amount of general  purpose grants received  by  Victoria include the  total  GST pool, the Victorian population as  a proportion of Australia’s population and a relativity which  is determined each year and which increases or decreases a state’s  share compared to an equal per capita distribution.

I  was concerned  to see  that on 17 March 2014 the Australian  Financial Review reported that Victoria and Western Australia are on the out in the GST carve-up.

It stated that leaked figures indicate that our share would be down  to 88 cents per dollar, down  from  90 cents. It is at the  lowest  level in nine years, and this  will  cost  the  state  of  Victoria about $300 million. To  provide  some context, if Victoria were to lose its AAA  credit rating,  the increased cost of borrowing  in  Victoria  would be about $170 million a  year  according  to  the Treasurer. This $300 million hit is nearly twice that figure, so you would think it  would  be  vitally important  and  something  that  would  be  focusing  the government’s mind.

Certainly  this  Friday, given  the  Treasurer’s conference is  on,  the eyes of Victoria will  be watching the  Treasurer and his  performance.  The Treasurer’s opinion on the  actual  relativity figure  Victoria  receives has always  varied considerably  based upon the job  he has occupied and the  party in power in the federal government.

Even at 88  per  cent this relativity  is  high  compared to the  time  when the current Treasurer was Peter Costello’s second-best adviser, yet it is lower than it ever  was under the federal  Labor government, when  the Treasurer complained about reductions in revenue.

In December 2006,  under a federal  coalition  government, with  Victoria’s  GST relativity at 87.5 per cent — lower than we will be looking at next year — the Treasurer sternly told us that:

  … if we wish for Victoria to continue as a sovereign state, we must act like  one. That means no more finger-pointing and no more blame-shifting. That means  embracing  responsibility for  those  areas constitutionally  reserved to  the  states rather than looking for opportunities  to pass political  and financial  responsibility to Canberra.

In 2009 he called the GST returns in previous years ‘rivers  of gold’, but seven out of nine of those  years had lower relativities than we have currently. Since then the Treasurer has seen fit to complain about  returns  that  were  actually lower than the so-called ‘rivers of gold’.

As is noted in the Australian  Financial Review  article that I have referred to already:

Last year, Victorian Treasurer Michael O’Brien blasted his state’s 90 per cent  share as  being ‘not  within a bull’s  roar of  being fair’  and accused  then  Treasurer Wayne Swan of failing to act to fix the situation.

In April last year he kept up the bragging, stating in the house:

We will keep the fight up for a fair share of the GST …

We  will get  no support  from those others who are Labor first  and Victorian  second …

We  know  that  this  situation  is  exacerbated  every  time  we have a federal conservative government in power. The real test will be whether or not we have a Treasurer or a shadow-boxer. The Premier told us before the  federal election it was  no problem that Joe Hockey  — the now federal  Treasurer  — had said that ‘there would be no  change  to the GST. Full  stop. End of story’.  The  Premier said:

I don’t interpret that as closing the door on a fairer distribution of the GST  revenue. I  interpret that as being making sure that  he is not … that he is  indicating  quite clearly  that  the Abbott  government  has  no intention  of  extending the coverage of the GST or increasing the rate of the GST.

On 17 March the Premier  vowed to kick and scream  for a fairer share of the GST cake and said it  was wrong for Victoria to get only 90 per cent. Of  course the situation has continued to get worse. We do  not have a Premier or  a Treasurer, we have  bystanders  and apologists for  a federal coalition government  that is causing major economic harm to  this state. The Premier’s sophisticated strategy of dealing with the  federal government by kicking and screaming clearly has not impressed  anyone.  Last year  when  90  per cent  relativity  was announced the Treasurer said  that Victoria remains  committed  to working  towards  equal GST distribution. Ultimately the test will be whether the Treasurer can deliver this Friday.