Thursday, 3 May 2012

One country or eight?!

As the polls now dramatically illustrate, most of us would really like the current Federal Government gone.  They've long since lost any credibility.

But oh dear, if only Mr Abbott and the Opposition looked any better!

The latest Abbottism is some popularist empathising with WA's argument that it is being dudded on GST revenue, and instead of the current system of horizontal fiscal equalisation based on capacity to raise one's own revenue we should move to a per capita distribution formula.

Let's think this through logically!

How federalism works

In a unitary system of Government (if only we could abolish the States and have fewer politicians enjoying taxpayer perks, whether at a Slipperesq level of excess or otherwise!) it wouldn't matter where the revenue came from, it would all be in the pot for use across the country.

In a federal system like ours, some Government revenue gets distributed across the country via demand driven and other Federal programmes.  So Western Australia, for example, is currently enjoying the benefits of extra funding due to its population boom and additional infrastructure needs due to the mining boom.

In addition in a Federal system, some taxpayer funding is held within a particular State by dint of State level decisions on which taxes and other revenue raising activities to conduct, and how to spend any money raised. 

WA of course is in a pretty strong position to raise its own revenue at the moment, hence the need for a redistribution formula.  So a certain amount of revenue is redistributed, in our system on the basis of need and capacity.  That's what keeps places like Tasmania and South Australia from looking like third world countries...

Two speed economy

We already have a 'two speed' economy, with booming mining states and the much more depressed South-Eastern Australian axis. 

Fiscal redistribution acts to counterbalance that to some extent.  So do measures like the mining tax.

Do we really want to create a Saudi Arabia of the West?

Please Mr Abbott, think before you speak!

Oh for good Government

Seems to me that what we really need at the moment is for both parties to take stock and, in the interests of the nation, forget just for a little while about politics and consider the national interest.

Labor should resign itself to its inevitable demise, and instead of worrying about fulfilling silly commitments it has made in the past (such as to a surpus), focus on what it needs to do to ever look like a real Government in the future. 

The Liberals need to forget the 'just say no' popularism, and focus on what they should actually do when elected.  They should focus on actually looking like a real alternative Government (here is a clue: dump Mr Hockey and other loose canons, and put some of the more credible looking candidates, such as Senator Sinodinos, onto the Treasury, Finance and other senior benches)

The ultimate result seems all but inevitable, so both sides should ignore the media cycle, and focus firstly on engaging the wider community on actual policy in a serious way, and secondly, on how to reform the implementation and delivery of policy better to avoid any more debacles of the pink batt-esque/practically every Defence major project you can think of (think submarines that don't work, ships that are rust buckets, Joint Strike Fighter, etc) variety...

Yeah, I know, wishful thinking. 

1 comment:

Anonymous said...


As usual, you are spot on. This country is now run by a Prime Minister nobody can stand listening to, implementing policies nobody agrees with and all this is held together because of two independents - this is as close as it has ever been to having a dictatorship in Australia.