Okay, let’s nail the furphy that the failure to obtain agreement with the West Australians could yet derail the health deal.
Wrong, wrong and wrong.
The myth persists that the Commonwealth can’t alter the GST without the unanimous agreement of the States. That’s based on the Intergovernmental Agreement reached between John Howard and the state premiers in 1999, where he promised there’d be no changes to the GST without their consent — partly to head off a scare campaign about GST rate increases.
But that was only ever a promise. It had no legal basis. As George Williams showed back then, it didn’t restrain the Commonwealth from any future changes. The promise was contained in the A New Tax System (Good and Services Tax) Act 1999 which says:
The Parliament acknowledges that the Commonwealth:
…(b) will maintain the rate and base of the GST in accordance with the Agreement on Principles for the Reform of Commonwealth‑State Financial Relations endorsed at the Special Premiers’ Conference in Canberra on 13 November 1998.
But that’s an Act of the Commonwealth Parliament, and that can be changed however the Commonwealth likes.
Moreover, that commitment, even if it were legally-binding, only applied to the “rate” and “base”. On the health deal we’re talking about the allocation, not the collection, of GST. And in any event, that’s irrelevant because in late 2008 the Commonwealth and the states agreed to supersede that Agreement with a new Intergovernmental Agreement on Federal Financial Relations. The 1999 agreement is a dead letter.
The Federal Government can change the GST allocation mechanism any way it likes. The allocation is now governed by the Federal Financial Relations Act 2009, put in place to reflect the 2008 agreement, which was centred around reducing the plethora of special purpose payments from the Commonwealth to the states down to 5. On Intergovernmental Agreements, that Act only requires the relevant Commonwealth minister allocating GST revenue to “have regard to” the 2008 agreement and “any other written agreement between the Commonwealth and the State that relates to the financial assistance”.
As some of our finest jurists and most eminent judges have said: “have regard to” don’t mean jack.
Kevin Rudd, provided he can get the numbers in the Senate, could amend the FFR Act to take back 30% of the GST everywhere but WA. And he could couple that with a special arrangement for WA, or simply leave the status quo intact.
As the caveat about the Senate shows, this is primarily a political issue.
Which brings us to an annoying problem for the Opposition in all this: they’re already blocking the private health insurance rebate amendment bill, and they’ll go to the election blocking that, it appears. The Prime Minister will make much of this blockage as a major threat to health reform, and Tony Abbott will make much of it as a broken promise. A double dissolution election will sort that out one way or the other. That’s not the issue.
The problem is there could be only three sitting weeks for the Senate before the election. That’s very little time for that leisurely chamber to get around to considering the Government’s GST amendment bill — especially if it’s not introduced until an agreement is reached with WA, which might be closer to June. If it is introduced then, it will need what’s called “T-status”, which is given to bills that must be introduced and passed in the same session (normally bills have “A” or “B” status which means they are introduced in one session but not considered for passage until the next, or even later).
If the bill is referred to an inquiry, as is the fate of most any bill these days, it will have to be a damn quick one to get passed before the election.
In the interim, the Government — despite having rushed this whole thing through in a matter of months — can cry obstruction and complain the so-called ‘States’ House’ is blocking and delaying a reform the states themselves have signed up to. If the Government is leaving WA’s GST intact and thereby not disadvantaging West Australians at all, it will look a lot like the Senate being willfully uncooperative. Well, even more than usual. The Opposition will have to figure out whether it wants to cop that grief, or just roll with the Government’s absurdly fast and highly-political agenda.
If you thought we could stop talking about health now, you might be wrong. We could be talking about it all the way until the passage of the bills.
The longer Rudd can drag out Health the happier he will be. He certainly doesn’t want focus on Asylum Seeker Policy changes, BER, Home Insulation, ETS or any other failed mess he has got himself into in an election year. It’s hard to believe a Prime Minister can hide behind only one issue in this country and ignore everything else going on with his Government.
Wow…..
Could you imagine our MSM = leftist media if the Senate did it’s job and blocked Rudd’s latest big spending insanity?
It would require a very brave Coalition and a Green party saying that Rudd isn’t spending enough and they can’t in all good conscience support such a paltry increase in public health spending whilst the government continues to provide public monies for private hospital health care………
Doesn’t really seem likely does it?
Still with Mad Uncle Bob and Nutty Aunty Christine anything is possible…..
The real question is Our Bernard the love-child product of Mad Uncle Bob and Nutty Aunty Christine’s artificial insemination program?
“..the caveat about the senate..”
That’s a big caveat. I heard Nick Xenophon talking this morning and, of course, the immediate point of contention about this “deal” is who is in CONTROL of the funds, who is distributing the funds to the various players, especially the new local hospital boards.
The States are claiming they are, and Rudd did little to dispel that notion when interviewed.
As Xenophon said, if all this has simply been about alot more money to the States, with the States still calling the shots in terms of expenditure, then its been a wasted exercise and Xenophon himself is very ambivalent.
I think Abbott will argue that there are better and more cost efficent ways of addressing this problem. The issue about health bureacrats is important. It would be interesting to see a breakdown of how much of each health dollar goes to nurses and doctors and other health providers, and how much goes in administration.
Labor and bureacracy are almost synonymous, and if the insulation debacle is any indication, a very inefficient bureacracy, when we talk about service delivery.
For heaven’s sake, the ALP is not synonymous with bureacracy – they exist and would exist if the man in the moon was in charge.
And our hospitals are not such a mess that more money won’t help.
Honest to goodness we whine a lot about not much don’t we and ignore big issues.
Ripper BK.
Let me add
PM Rudd believes about 30% of State GST funds at least is needed to be spent by States for their contribution to health provision.
The States agree by saying they will put 30% of their GST into a pool. (pool because the are too scared to trust the Feds)
Failed state health provision, where it is so, is because States spend less than 30% of their GST here enjoying spending it elsewhere.
Federal health expenditure areas are much less criticised for failure.
Feds (one body) expect States to steal health money for other purposes so are insisting on controlling that 30% which they guarantee to health.
If that 30% is given to the States on a promise that they will give it to health there are 7 bodies to chase down to get it to happen instead of 1 body (Feds) to chase down.
There is more reason for the Feds not to trust the States than visa versa on performance alone.
This Federal Govt is asking for trust as the first Federal Govt to get serious about health and proving it by giving more money for health then ever before beyond the 30% and now.
The rest is worse than kindergarten including experts (rather noble ones at that) who are all missing the seriousness of what heavy duty reform means.
There’s a whole lot of essential reform needed in medicine administration and action separately to finance administration which is what the PM is on about here. The PM expects Drs to do that and to get out of the way with their gripes which are rather ancient. Look to the new the PM is saying.
Reinvent your gripes if you must or especially if you still need to in the new system.
The medical experts are too inept to make that happen; they haven’t till now, and are confusing the whole thing into a mess that the media has been unable to see through.