STATE TAXATION SYSTEM REVIEW
Page: 2443
The Hon. GREG PEARCE: My question is directed to the Treasurer, Minister for Infrastructure, and Minister for the Hunter. What outcomes does he expect to achieve as a result of the inquiry into State taxes and revenues announced in August and to be conducted by his friend Neil Warren?
The Hon. MICHAEL COSTA: I am happy to answer the honourable member's question, but Neil Warren was the bloke who put together the Fightback! package for Dr Hewson when he ran, unsuccessfully, against Paul Keating in the unwinnable election. Does the Hon. Greg Pearce know that? Neil Warren, a highly respected academic in these areas, has done a lot of work.
The Hon. Melinda Pavey: Ha, ha!
The Hon. MICHAEL COSTA: He has. He has done a lot of work on tax policy and he is highly regarded across the political divide, which is why I am sure Dr Hewson used him for his Fightback! package.
The Hon. Michael Gallacher: But he is still a friend of yours.
The Hon. MICHAEL COSTA: No, I have met him on about four occasions. He is not a friend of mine. He is somebody we have engaged in a professional—
The Hon. Charlie Lynn: You must have a friend somewhere.
The Hon. MICHAEL COSTA: I do not have friends. They are very difficult to manage.
The Hon. John Della Bosca: You think he is joking!
The Hon. MICHAEL COSTA: Opposition members think I am joking. Neil Warren, who is highly regarded, has an international reputation in matters to do with fiscal or financial arrangements, which is why we have engaged him to follow up his first report. We showed very clearly that, under our current Federation, New South Wales gets a very raw deal in fiscal arrangements. For those who forget the figures, the Commonwealth raises about 80 per cent of the national tax take and it spends about 50 per cent of that. Most of that expenditure is on transfer payments in the social welfare area. Conversely, the States raise about 16 per cent of national tax and they are responsible for 40 per cent of front-line expenditure, that is, in areas such as hospitals, schools and health.
The Hon. Melinda Pavey: And police.
The Hon. MICHAEL COSTA: And police, and disabilities, and every other thing that State governments are required to provide. So, clearly, at the moment the system is very inefficient. It is particularly inefficient for States such as New South Wales that are continuing to subsidise resource-rich States such as Queensland. It is certainly not a fair system and it is something that we will seek to address. One thing that is important—
The Hon. Melinda Pavey: What does Kevin say?
The Hon. MICHAEL COSTA: I am glad that the honourable member asked, "What does Kevin say?" Kevin says that we ought to fix the system. Part of the reason we are putting this report together is to provide a model on what a sensible system should look like. The Federation has been well served by our system of federalism for 100 years. It needs to be recast so that it can operate in the twenty-first century. That is what Labor is about. It is about the future, not the past. It certainly will not be sitting around with billions and billions of dollars of surplus, not providing essential funding for front-line State services.
What is going on in Canberra at the moment is an absolute disgrace. The Federal Government is prepared to fund a hospital in a Tasmanian marginal seat but it is not prepared to put decent resources into the New South Wales hospital system and other State hospital systems as part of a sensible package to reform health care. The pork barrelling that is going on at the moment is not only a sign of desperation; it is also a sign of a government that has lost its reform initiative.
The Hon. Charlie Lynn: Why don't you talk about the Federal Government?
The Hon. MICHAEL COSTA: I am talking about the Federal Government. I am also talking about the last remaining Coalition Government, which will not be there after the Federal election.