Western Australian Liberal premier Colin Barnett has signalled that a major blowout in the estimated cost of the national disability scheme will be a main issue for Tony Abbott’s first Council of Australian Governments (COAG) meeting next month.
Declaring he would be looking for a new “tone” at COAG, Barnett said other priorities would be education funding and whether there were to be “any changes to the goods and services tax distribution”.
In an interview with The Conversation on Tuesday, Barnett also backed Education Minister Christopher Pyne’s retreat on the Gonski schools funding plan, and bluntly described the problems with Indonesia as “a fumble by Australia and an embarrassing one”.
Abbott has indicated he wants to scale back COAG’s activities, as well as rebalance responsibilities between the federal and state governments. His first test will be the December 13 meeting, immediately after Parliament rises for the year.
While Barnett will be an ally on some issues, the Premier indicated that he will continue to fight to get a better carve up of GST revenue for WA. The federal government has said the distribution is a matter for the states. Barnett also argues for a broadening of the base.
After a meeting of federal and state treasurers today, Joe Hockey said that on the GST “the states were provided with the material they had previously requested on the costs of any changes to the online threshold.” The states want the threshold for imported goods lower. Hockey said there was no agenda item to discuss any changes to the GST base or rate.
Barnett is keeping up pressure on the carve up. “For Western Australia we will continue to bang on about the distribution of the GST” between states.
He also said the base should be widened with all exemptions removed except for health and education.
But WA wants the distribution addressed before any broader reforms dealing with the exemptions from the base.
WA, as a prosperous state, accepted it had a responsibility to subsidise weaker states “but there is a limit”. At the moment virtually all the cross subsidy was coming from WA. “So we think that other states can share that burden and maybe the Commonwealth can pick up a bit of its responsibility particularly to the territories.”
He wanted a decade-long plan to improve WA’s share, and rejected the argument that the carve up was a matter for the states. “It requires some national leadership.”
Barnett said the exemption of fresh food from the GST did not make “any kind of sense at all”. About about Abbott’s election promise not to broaden the base or increase the rate he said: “That’s a political judgement but if we are to have the GST serve its original purpose as a reliable source of income for the states, there needs to be some reform.”
The Premier said the cost increase in the disability scheme was “a big blowout, it is not a small one. Although he was tentative about any estimate he suggested it might be up to 50%.
"We are not talking about $1 billion or $2 billion.”
The scheme was a signature policy of the Gillard government which received bipartisan support from Tony Abbott in opposition. But Hockey has always less enthusiastic and worried about the large cost.
Barnett said that “I think we’ll probably find out around COAG that the cost estimates are way, way above what has even been speculated.”
“And then it’ll come down to the question, can the Commonwealth really contribute what it has promised?”
He said the states “have got a pretty good idea of what it costs and if you’re going to expand the scheme, extend it to more people, which is a good thing, the cost is extraordinary”.
On current figures (before any blow out) the scheme has a gross cost of $22 billion a year when fully operating. It will require an additional contribution from the federal government of more than $8 billion each year from 2019-20. That is on top of current Commonwealth spending.
Assistant Minister for Social Services Mitch Fifield last week indicated that in the first quarter of trial sites, the cost of plans are exceeding the modelled average costs by around 30 per cent. Demand has been greater than anticipated and package costs higher.
With the Abbott government under fire from states that agreed to Labor’s Gonski plan, including the Coalition states of NSW and Victoria, Barnett – who refused to sign up - is firmly on the side of Pyne, who has walked away from the Coalition’s election position of a “unity ticket” on the issue over the forward estimates period.
Barnett said that instead of talking about education principles and improving standards “it ended up with the federal government under Labor trying to pick off one state after another with offers of more money”.
“You cannot have a consistent education scheme on that basis, so I would hope Chris Pyne … does what he is saying, goes back to square one … let’s get our principles set and let’s have consistency across the country. At the moment we’ve got inconsistency across the country and that’s not going to work.”
He said states might grizzle but “at the end of the day as far as Commonwealth funding, the Commonwealth will call the tune”.
WA, along with Queensland and the Northern Territory, will benefit from the $230 million for next year that Pyne announced today, to be shared among the non-signatory jurisdictions.
Barnett said he would like to see at COAG a more “broad ranging, high level, philosophical” discussion, rather than the level of detail that happened under Labor.
“What I’ll be looking at will be the tone of the meeting,” he said, describing himself as now the “longest survivor of COAG meetings”.
He said Kevin Rudd had “almost elevated the role of COAG to a parliament” – which was not appropriate - while Julia Gillard “resented its existence and really didn’t want to be there”.
“I would hope that Tony’s approach will be to sit down with premiers and talk about some of the bigger issues for Australia and try to get some sort of agreement, consensus if you like, about how we go about education, how we go about [the] disability scheme, how we go about boosting productivity.” The bureaucrats would then deal with the detail.
Speaking in his Perth office Barnett said: “Tony Abbott’s told me around this table that he was a centralist but he’s reformed. So we’ll see how he goes in a couple of weeks time.”
Listen to the full interview with Colin Barnett on the Politics with Michelle Grattan podcast, available below, by rss and on iTunes.