Productivity Commission appointment raises GST red flags

Productivity Commission appointment raises GST red flags

Treasurer Jim Chalmers’ appointment of Danielle Wood as the Productivity Commission chair is a red flag for WA’s fair share of GST, and perhaps even the death knell of the Productivity Commission. The Labor Party opposed the PC before it was even established in 1998 by the Howard Government.

They have angled to repeal it ever since because Labor’s traditional owners, the trade unions, have always hated it. Over the last few years, the commission issued reports calling for changes in industrial relations aimed at limiting union influence in port operations and has cautioned multi-employer negotiations might result in increased strikes, a wage price spiral, and diminished productivity.

Peak union body, the Australian Council of Trade Unions, even went so far as to call for the PC to be abolished just last year. ACTU assistant secretary Scott Connolly said: “We strongly encourage the Albanese government to consider a review of the Productivity Commission to examine whether the agency should be replaced or repurposed.”

By sweeping out the old guard at the PC, it’s clear the Treasurer is looking to have his cake and eat it too. Not only can he now start his so called “PC shake up” but he has also appointed the perfect person to undo WA’s fair share of GST.

I cast no aspersions over Danielle Wood, nor do I question her independence, but Western Australians should be aware that earlier this year she co-authored the Grattan Institute report, Back in Black 2023, which called for the WA GST deal to be undone.

Without the sensible and pragmatic intervention of the previous Coalition Government, WA’s GST revenue would have fallen to 16¢ in the dollar in 2022-23, and 10¢ in the dollar in 2023-24.

This is the kind of GST share Danielle Wood believes WA should be entitled to. It’s not a stretch to think this is also the opinion of Dr Chalmers, who has every other state Labor premier breathing down his neck urging him to reverse WA’s GST deal.

NSW Premier Chris Minns has gone on the record saying that his State “ is entitled to more — and that is an implicit criticism of the current arrangement. It’s all up for negotiation in the next few years, and I’m not going to take a backward step from the perspective of taxpayers in the State.”

Let’s not forget it was the Productivity Commission’s groundbreaking report into the Australia’s GST system in 2018 that became the catalyst for WA’s GST fix. Wood’s appointment as chairwoman leaves no room for doubt: WA’s GST share is in question, as is the role and responsibilities of the commission.

At a time when Australia’s productivity is at a seven-year low, I believe there are far bigger things the Treasurer should be worrying about than recasting the PC’s role or fiddling with WA’s GST share.

Any attempt by the Federal Government to alter the GST arrangements, which makes WA worse off, will come with electoral ramifications. Along with my Liberal colleagues, I remain committed to vigorously safeguarding our GST share and will spare no effort to ensure we retain our fair share.

WA’s economy has been the powerhouse carrying us through global financial crashes and pandemics. Dr Chalmers would do well to remember that when it comes to re-negotiating the GST deal.