MIL-OSI Australia: Interview with Matthew Pantelis, 5AA

By   /  July 5, 2018  /  Comments Off on MIL-OSI Australia: Interview with Matthew Pantelis, 5AA

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Source: Australian Treasurer

Subjects: All States and Territories better off from a fairer way to share the GST; Mayo by-election; National Energy Guarantee

MATTHEW PANTELIS:

So what do you say to Labor claims here in South Australia after your compensation has passed, we’ll be a long way behind?

TREASURER:

Well it’s rubbish because the compensation is permanent. It keeps going beyond the eight years. The GST pool is forever expanded. So they don’t get it. They don’t understand it.

PANTELIS:

Well is it enough though? What you’re promising for all the States: A, they have to sign off on it; B, you’ve got to get it through the Parliament. Do you think it is enough compo for all the States to say “yeah this is a good deal” and South Australia as well?

TREASURER:

Yeah well in reverse order: yes it is, because as I said the compensation is permanent. At the end of those eight years, South Australia is getting $53 million extra than they would otherwise have got. They’re $257 million better off over that period and then that just continues into the future. Second point is, no it doesn’t require legislation to do this. In fact, the Commonwealth can do this unilaterally but my preference is to do it by agreement with all the States and Territories and have a new permanent intergovernmental agreement which guarantees that permanent baked-in compensation, not just to South Australia but to every State and Territory, into the future. So, look I expect that some people, you know, for political reasons, are going to want to score political points off this. That’s politics. Frankly, I’ve had a gutful of politics on the GST. What we needed is to fix the system. We needed to do it in a way that left everyone better off. That’s what we’ve done. The South Australian Government, like all the others I’m noting around the country, are very prepared to work with us to now get the numbers fine-tuned to ensure that they can have that confidence and that’s what we’ll do. We’re just doing the job of fixing the problem which is what I think everyone would expect us to do.

PANTELIS:

So WA, the Labor states, Queensland, Victoria, they’re signing off on this, do you think?

TREASURER:

Well no one is signing off on anything yet, including the South Australian Government. I mean there is still a lot of work to do to finalise the numbers. But we’ve outlined how we believe the plan would work, and I think that’s had a good reception. I’ve spoken to the Labor States in Queensland and in Victoria and in Western Australia as well as the Liberal states, and everyone is prepared to work with us. They can see how the model can work but obviously they want to satisfy themselves around the numbers, and that’s fair enough. But we are confident. The numbers that we are working off, they’re not ones that we came up with; the Productivity Commission came up with them independently from working with all the States and Territories, so we’ll re-do that work. But for those listening, what that means is, at the end of the day, the hospitals, the police, the services that you rely on in South Australia from the Marshall Government, they will be even more able to do that because there will be more resources going into the States and Territories for these purposes and we’ll have a fairer GST. So it’s all good.

PANTELIS:

The Productivity Commission, though, did recommend, and you’ve rejected this, I mean, you want to, you claim the numbers but you rejected their biggest call, which was for the amount to be pegged to the average across all States and Territories as opposed to the strongest State.

TREASURER:

Well, no I didn’t agree with that for two reasons. One was, I think it ultimately took the pendulum too far the other way when it comes to the fair go principle. I’m sure you’re listeners will be pleased to know that they weren’t going to be subjected to an economics lecture on horizontal fiscal equalization – or they’d go horizontal I suspect.

PANTELIS:

[laughs] certainly right

TREASURER:

But basically what it means is the fair go principle and it means that the larger States subsidise the smaller States and there’s a formula for doing that. And I think if we’d done what the PC said it would have gone too far and I think it would have undermined that fair go principle. And secondly to ensure that all States were better off then the cost of it was prohibitive. So the PC did say that the formula needs to change and that the system was broken. They also said that their recommendation was “not unambiguously any better” than any other way of changing it. That was just their preference. We’ve used the information that they’ve pulled together to frame ours and, you know, it’s a sensible way ahead.

PANTELIS:

Is the need to shake all this up, has it arisen out of the Western Australian mining boom essentially? Is that what’s caused this?

TREASURER:

Yeah, that’s what proved the system was broken. That’s what crashed the system. And the reason it crashed the system is because the formula as it’s currently written means that you can have a state, like Western Australia, it could be the same in South Australia, it could be the Northern Territory, a smaller State which hasn’t got as big an economic base as New South Wales and Victoria, they get a shock to their economy, whether it’s minerals or whatever, and then it shoots to the top of the pile and its volatility affects the distributions to everyone else. So the system wasn’t immune from these one-off shocks and so what we will now have is the formula would be pegged to the higher of New South Wales or Victoria. They’re much bigger States; they don’t have the same volatility. That means there will be much more certainty in terms of what the revenue distribution is and we make sure that we learn the lessons of what’s happened over the last decade.

PANTELIS:

And that’s why presumably you’re able then to return 70 cents per person per dollar of GST back to the States. Is that right?

TREASURER:

Yeah, a minimum of that, and goes up to 75 in 2024-25. I don’t anticipate that that floor would have to be called on because I think the change to the formula we’re making would prevent that.

PANTELIS:

Ok. Just a couple of other quick questions wearing your Treasurer’s hat. With Mayo, the Government spending big, you’re likely, though, to not win the seat. Are you concerned about how much money you’re splashing around there?

TREASURER:

Well, the commitments that we make are supported by the Budget which I handed down which shows that we are going into a balance, a surplus, one year earlier than expected. And what we’re doing is we are growing the economy. See if you grow the economy, you can do things. If you don’t grow the economy then if people are worried about what the GST distribution will be, well it’ll always be lower under Labor because they’ll run a slower economy.

PANTELIS:

Do you want to make Mayo a marginal seat though that you can win back at a General Election?

TREASURER:

Well we would like to win the seat right now. We think Georgina Downer is the right person to be representing Mayo and she can form part of a team in the Turnbull Government that will deliver a stronger economy for South Australia. I also wanted to say that that’s also working closely with the Marshall Government. I think there has been a real sea-change in South Australia and with the confidence that Steven and Rob Lucas are bringing to the State, we want to work closely with them, and the more members of the Liberal Party in parliaments, whether it’s at State level or federal level, I think that’s good economic news for people living in South Australia.

PANTELIS:

Well one of the key policies championed by the State Treasurer, you might be aware, on shop de-regulating hours, there, has failed, well will fail in Parliament with the upper house crossbenchers guaranteeing that they’ll vote against it. So what would you say to that?

TREASURER:

Well I’m disappointed but I want to commend Rob Lucas for showing the strength of character and conviction to do what he believes is right. South Australia now has, I think, passionate economic leadership and they’ve got a plan to grow South Australia’s economy and they know the direction that they want to head in. We’ve been knocked back by our Senate on a number of things we wanted to do but we’ve stuck by our guns and I have no doubt that’s what Steven and Rob will do because they believe in a stronger economy for South Australia.

PANTELIS:

And energy is the other issue. It continues to really tear at the Liberal National Parties. What are you… are you going to put money aside as Treasurer for the National Party proposal of a $5 billion fund to help build three new baseload power stations?

TREASURER:

What we’ll do is we’ll implement the National Energy Guarantee and we’ll welcome the support of that by the Marshall Government. That’s point one. And what that’s about is actually having lower electricity prices. Now to do that you need to have a sustainable baseload capacity in your system. That needs to be done on a sustainable basis. And the way you do that is making sure that the numbers add up for the investment for people to put the money in. That’s what we’re doing. That’s what is going to deliver lower electricity prices. We understand the point being made about baseload capacity and the system we are putting in place will address that. At the end of the day, it’s the outcome you want. We’re focused on lower electricity prices and the system that delivers lower electricity prices, not one that through subsidies only drives electricity prices up.

PANTELIS:

You’re going to struggle though. The NEG getting through the upper house, it’s not going to happen there either is it?

TREASURER:

Well I disagree with that.

PANTELIS:

Should there be an energy power price target included?

TREASURER:

The NEG, the National Energy Guarantee, delivers for sustainability and it delivers for reliability. That’s what takes power prices down. We’ve already turned the corner on power prices. We’ve got a long way to go. But the reason power prices are high is one, as the Prime Minister calls it, the idiocy and ideology of the climate fights and the energy fights of the past. What that has done is failed to deliver certainty for people to invest in new energy infrastructure that is sustainable and that is reliable. So we want to put all that rubbish to bed and just focus on a solution that we know can bring power prices down. So we’re not distracted by the ideology and all this sort of stuff. We’re not interested in having a fight. We’re interested in delivering lower electricity prices.

PANTELIS:

Scott Morrison, thank you so much for your time this morning.

TREASURER:

Thanks a lot, Matthew.

MIL OSI News

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