For European Australians in the 1830s, Van Diemen’s Land was the place to be. Booming exports of wool, wheat, meat and whale products made the island a standout economic performer among Britain’s Australian colonies.
The British military, which used Hobart Town’s deep port as a strategic naval base, saw fit to beef up coastal defences. The town of 24,000 settlers was six times the size of newly-established Melbourne across the water and a dozen times bigger than a small penal settlement on Swan River, Western Australia.
Time changes everything. Swan River became the capital of a new colony, Western Australia, whose state economy is now 10 times bigger than ours, enabled mainly by lucrative iron ore and gas exports.
As everyone knows, Tasmania is now the minnow. But all the noisy players in last week’s right royal bunfight over GST distribution, including top dog Western Australia, should understand history’s lesson that economic success will one day fade, and when it does it pays to have friends.
The trigger for the bunfight was last week’s Productivity Commission report on GST distribution. Under the Morrison government’s 2018 GST redesign – designed to hold critical WA seats in Canberra – Tasmania with its heavy debt burden will be exceptionally vulnerable from next year when temporary protection is phased out.
The Productivity Commission wants to revert back to when the Grants Commission helped smaller economies like Tasmania (and, ironically, Western Australia) weather hard times. And that got WA premier Roger Cook, treasurer Rita Saffioti and Liberal leader Basil Zempilas fired up.
Cook spoke of “lazy, mendicant states” and “East Coast clowns” who “do not understand Western Australia.” Said Saffioti: “We’re subsidising the rest of the nation… by $2 billion a year.” Zempilas labelled the Productivity Commission findings “dark and dangerous”.
Other leaders were understandably miffed. Regardless of party affiliation, every state government east of WA has urged adoption of the report’s recommended option – that the 2018 changes be ditched from 2027-28 and that GST distribution revert to the earlier model.
Economist Saul Eslake, a native of this island and a champion of fiscal equality and fairness, told ABC Perth radio on on Friday the WA argument was “completely spurious”, reminding listeners that the GST was “a federal government tax imposed under federal law and collected by a federal agency”. No state, he said, can claim any of it as “theirs”.
Nearly a century ago, two-thirds of Western Australians voted to leave the federation. That didn’t happen because the rest of the country voted against it, supported by the UK parliament. But in response the Commonwealth formed the Grants Commission to ensure roughly equal living standards across all states and territories.
For 70 years WA reaped the benefit of that arrangement, getting a bigger slice of the federal tax pie per capita than the two richest states, NSW and Victoria, which effectively subsidised the rest of us. That fact, remarked Eslake, would make WA itself over those 70 years one of Roger Cook’s “lazy mendicant states”.
In the early 2000s, said Eslake, “a combination of nature and China” made Western Australia “richer than the rest of Australia by a bigger margin than any other state… in Australia’s history”.
Western Australia’s reliance on revenue from NSW and Victoria for most of the last century was behind the swift response from the NSW premier, Chris Minns, who likened Western Australia’s attitude to that of a “greedy oil-rich Gulf State”.
Sitting on the federation’s periphery, both Western Australia and Tasmania have always feared domination from the big population centres. But WA currently has the means to weaponise that fear, and WA Inc – the state’s nickname for shoddy governance arising out of past shady dealings – could yet make this spat turn ugly.
We live in an age where bullying behaviour is becoming normalised, almost expected in public life. But insulting other leaders in the manner we saw last week isn’t going to help anyone. For most of last century Western Australia depended on those “East Coast clowns” to keep it afloat. It wouldn’t take too many shifts in a volatile global economy to evaporate Roger Cook’s rivers of gold.
Meanwhile Tasmania’s own fiscal mess gets worse. The Rockliff government’s unwillingness to confront our state’s underlying revenue issues and open up to a genuine public dialogue has left it in the ludicrous position of calling on federal charity. If there are any East Coast mendicants, we’re it.
Worse, with environmental and climate issues now impacting measurably on Tasmania’s wellbeing, Labor can’t be relied on to provide effective scrutiny of those or any other issues, as some admirable reporting by David Killick last week made clear. That’s a whole new story.