Anyone listening recently to the Treasurer, Peter Gutwein, is likely to believe Tasmania lost heavily in the latest round of GST allocations.
The new assessments, he said, would cost the state $84 million this year. But don’t worry! The government’s cost slashing is coming to the budget’s rescue and the return to surplus is safe!
But anyone actually reading the Commonwealth Grants Commission’s documents will see a quite different story. Yes, the state will get 3.8 per cent of the national GST pool in the coming financial year, compared with 3.9 per cent at the moment. What Mr Gutwein fails to mention is that there is much more money in that pool, so our slightly lower share will actually deliver a rise of $50 million dollars in the new financial year.
The Grants Commission’s explanation couldn’t be clearer.
‘While Tasmania’s increased fiscal capacity will see its GST share fall from 3.9 per cent to 3.8 per cent,’ they said, ‘its GST entitlement will rise by $50 million or 2.2%, due to growth in the pool.’
So rather than being $84 million worse off, we will in fact be better off by $50 million. The difference between Mr Gutwein’s story and the Grants Commission’s is $134 million.
We need a bit of context here. Overall, the state will receive $2.299 billion dollars in GST, or more than a third of the state budget. In 2015-16 we got $2.249 billion. Even a decline of $84 million would not have been anything like as serious as the Treasurer would like us to believe.
Nor is it true to say, as Mr Gutwein has, that the decrease in our GST relativity, down by 0.1 per cent, is because of the government’s success in creating a newly vibrant, prosperous economy.
The state’s economic output has been growing ‒ from an appallingly low base ‒ but that, according to the Grants Commission, is not the reason. Keeping public sector salary rises to below the rate of inflation, and the neglect of government schools, is behind most of the change.
‘There was a decline in Tasmania’s service delivery costs due to a fall in its relative wages costs and a decline in the number of government school enrolments,’ the Commission said. Because Tasmanian public service wages have fallen compared with other states, we will get $31 million less in GST next year. And falling government school enrolments will cost us $17 million.
It suits the state government to downplay the amount its gets from the GST. Since being elected, they have stripped money out of services ‒ health and education particularly ‒ to reduce government spending so they can claim to have returned the state to an operating surplus before the next election.
But this hasty return to eliminate a comparatively tiny general government net debt ‒ it does nothing for the debts held by state government enterprises ‒ has come at a cost.
This is the reason the capacities of our hospitals are falling so far behind those of other states. It’s the reason why thousands of Tasmanians cannot get the health care they need. And it’s the reason why our public-sector doctors and nurses are carrying such impossible workloads.
In the financial year that’s just about to end, Tasmania was given an extra $266 million specifically to deal with the extra health needs of the nation’s oldest, sickest, poorest population.
None of that money has gone anywhere near health. We know this because, if this money was spent on health, the state government’s per capita contribution to health funding would be well above the national average.
But according to the only accurate figures available ‒ from the Australian Institute of Health and Welfare ‒ the government actually spends less than other states. This has gone on for many years, and over the past decade at least $1.4 billion has been lost to the health system. There is, in other words, no excuse for the penury in which our hospitals find themselves.
That sleight-of-hand has continued under both Labor and the Liberals. But it has become much worse since the election because last year the Grants Commission became so much more generous in its assessments of Tasmania’s health funding needs.
That increased generosity has given us almost $100 million a year more than we would have got under the old system. Because none of it goes into health, the rip-off has become much more serious.
On top of the GST ripoff comes the budget slashing of two governments: the 2011 cuts under Labor and two years of public sector slash-and-burn under the Liberals.
In the coming financial year, Tasmania’s GST allocation for health will be reduced by $15 million. $266 million will become $251 million. That’s still a lot of money but it will have no effect at all on our hospitals.
Mr Gutwein will again grab the lot for his cunning plan about the surplus.