Bruce Billson the GST debate and the predicament of Western Australia has thrown up a big reform agenda. The Feds and others are looking to Western Australia to fix its own house before GST is looked at – or the carve up of that.
Just how much of a project lies ahead for Western Australia, particularly as it affects small business?
Well the immediate challenge for the West is their budget.
And clearly they have a combination of influences at play there.
The GST – a tax raised for the states, received by the states, spent by the states. So the states really need to get together and navigate a way through, so that these adjustments that are obviously landing quite heavily on the West, where less than a third of the tax paid by Western Australians comes back to them through the GST.
For small business though the real thing is about energising the economy. That has been our focus nationally and that is an opportunity in the West as well.
There are some regulatory reform measures that the West could take. There are also some opportunities for extra revenue from the Commonwealth, through our Asset Recycling Programme.
So there are opportunities there. It is really focusing the minds, and that is a good thing.
Why haven’t they adopted some of these regulatory reforms? We have heard so much about trading hours, we have heard the Treasurer talking about an anachronism to do with lighting shops – you can’t sell- is this correct?- light fittings after dark.
Yes there are some particular rules around trading hours in the West that are quite discordant with what is happening elsewhere in the economy.
Some feel that is there to help small business. A lot of small businesses recognise though if they can’t open to meet the needs and delight their customers people will meet those needs somewhere else.
That is where online transactions are also an issue. There is an appetite from the feds to deal with the anomaly that is not having GST applied to some online purchases sourced from overseas. But even in that case, the West is standing in the road of that as well.
How do we explain the fact that that was allowed to persist for so long? Because as long as any of us can remember Premiers have come to COAG meetings and all have agreed to harmonise this and reform that - and yet you still have these pockets of seemingly archaic practices.
Well even going back to the Hilmer period which was some 20 years ago and there was competition payments made available by the Commonwealth to the States for changes in their state economies.
Western Australia decided to forgo some of those revenues around a decade ago. Now we have just concluded work through the Harper review, looking at what we need to do to energise enterprise – and again, we see there are a number of micro economic reform opportunities in all states, and particularly in Western Australia, that are holding back economic activity and vitality in the West.
But ultimately, other than the GST lever or a couple of others, this is from your point of view, not something the Feds can drive in Western Australia?
We don't have the ball. It's about Western Australia seizing these opportunities to generate greater vitality in its economy. And through that, better revenue streams for the State Government and more opportunities for Western Australian citizens.
Which leads us back to the discussion that will be had on Friday. You are suggesting this is something that the states have to work out among themselves, carving up that GST?
Not suggesting, you are being a little kind, Greg. It is the case the states and territories need to work out if they want to change the way a tax raised for them, received by them, spent by them is distributed - they need to arrive and land at a position that all of them can agree.
That is what started the process; that is how we have the formula we have now.
If there is a true to change it, there needs to be collaboration between the states and territories to arrive at an agreed position on how the cake will be shared.
Yet the Federal Treasurer does hold a dagger over the heart here. He can actually, as I understand it, make a decision about, for instance, freezing the distribution at the current year's levels. So it is something that the Commonwealth can at least in the short-term intervene and arbitrarily deal out?
Yes but it won’t fix the issue, it will cryogenically freeze it. That won’t change the fact that less than $1 in $3 of GST paid by Western Australian citizens is going back to them by way of GST distribution.
You might say ‘well you can freeze it where it is’- but that is where the concern is. If there is a change, then that change needs to be universally agreed by the states and territories, mindful that they universally agreed on the current formula and distribution methodologies.
If there is a need to change it, that can't be unilaterally done by anybody. So that is a discussion they need to have.
I know in the past some of the states have been talking to Western Australia about their circumstances and about what changes might be useful; things like the way investment in infrastructure that supports the mining industry, how that's calculated and what that might do at the margins, they are useful discussions.
They are discussions the states and territories need to have with each other and seek to find an agreed position.
And that is one that they will have on Friday. Just on the GST, when you see opinion poll surveys out, as they were yesterday, suggesting that when it comes to broadening the base or increasing the rate, a larger number, apparently of Australians are at least open to the idea, around a third now. What goes on in your mind, what opportunities does that throw up in your own mind?
Well I encourage people to engage fully with the tax reform white paper process. Now is the time where we are having the adult discussion of what the tax structure and calibrations need to be for our future and to achieve our goals as a nation.
If people have a contribution to make, now is the time.
As we have made clear time and time again, for any change to occur, it needs to be agreed by all states and territories - and frankly, it needs to be a bipartisan change, otherwise we can't land those changes, we are not there yet but the tax white paper process enables people to make their views known and to see what possibilities might be there.
But your own political instincts, are they emboldened to push into this reform area when you see some evidence that the public might be persuadable on this issue?
Well my political instincts bubble over with excitement about the small business community and energising enterprise.
And that is why I am making sure that the small business and family enterprise community has its engagement with the tax white paper process to see what tax change might be helpful to further energise enterprise beyond the work and the leadership the Abbott Government is providing.
Ok we have spoken a lot about reform. Just on regression now, there is some evidence that cash-strapped states, particularly South Australia, looking at going back into things like financial institutions duty. Do you have a problem with that, especially as it might affect small business?
Well the states have taxation powers of their own that they are able to exercise if they choose. The one that you are talking about, that would be a regression because the deal that set up the GST, having it available as a tax raised for the states, revenue received by the states and then spent by the states was to see other taxes removed.
Now that would be welshing on the very premise that the GST was implemented on and that is something I would be disappointed about.
But it does make the point, states and territories have the capacity to levy their own taxes and they should think wisely about whether that is in the interests of the state and territory economies.
It is not the job of the Commonwealth to run around raising all of the revenue just so the states can say ‘more please, more please’, and then they have great ideas about how to spend it, raising revenue and taxes is an important and key accountability of Government.
If states and territories are looking at their own tool kit and what they can do, well good on them - but let's not welsh on the deal when the GST was introduced for the states’ benefit.
Alright, well I am sure we will hear more about that, particularly throughout the course of this week.
Bruce Billson, thank you.
Good to be with you Greg.