Page 1180 - Week 05 - Wednesday, 30 May 2007
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into the West Basin of Lake Burley Griffin, which has been missed. I find this indeed an opportunity missed, particularly as the Centenary of Canberra is just around the corner. I would have liked to have seen signs of a greater commitment to the national capital.
I acknowledge that the ACT has benefited from stronger than expected growth in the GST pool over the past few years as a result of the Australian economy recording rates of growth well above the longer term average. This good news is unfortunately overshadowed by the fact that net payments to the states and territories from the commonwealth as a proportion of overall economic activity over the whole post-GST period remain at levels below the pre-GST average of six per cent of GDP in the 1980s and 1990s.
The GST is not the gravy train that some in the federal government would have us believe. State and territory government total revenue since the GST tax reforms have not kept pace with GDP growth and are expected to grow only modestly in the period ahead. Over the last 12 years, the Australian government has consistently increased its share of total tax revenues to the detriment of the states. The constitutional limitations on the ability of states to raise their own revenues has led to a fall in the states’ share of total tax revenues by around 10 per cent over the last 12 years, from 44.9 per cent in 1993-94 to 35.2 per cent in 2005-06.
All states and territories have consistently pointed out that the revenue returns from economic growth are not being directed into those core services which are most important to Australians, areas such as public hospitals, government schools, policing and public transport. The states and territories have responsibility for the delivery of these services, but do not have the tax powers in order to fund the levels of services needed, nor to cater for the rapid growth in demand for these services.
The commonwealth government, for example, has progressively reduced its share of funding to public hospitals through the Australian health care agreements, the AHCA. In 2001-02, health care grants constituted around 31 per cent of acute care costs. This contribution has now reduced to around 23 per cent. This is over a period when health care needs have grown significantly. A similar trend is evident in disability services, where the commonwealth’s share of funding has fallen.
The fact of the matter is that the commonwealth has increased the amount of tax it takes from the pockets of Australians, while the states and territories continue to provide the services and economic and social infrastructure that are important to people—managing the ever increasing demands for services in public hospitals, schools, law and order and public transport.
I say this because the federal Treasurer is demanding that the ACT, along with the states, abide by the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations by abolishing a range of important state taxes. At the 2007 ministerial council, the Australian government Treasurer called on the states to develop a schedule for abolishing stamp duty on non-residential real property, the last business related stamp duties listed under the IGA for review. He repeated his call in the federal budget papers. The Treasurer indicated that the Australian government would be willing to be flexible as to the timing and phasing of
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