Time to rid Australia of the burden of Tasmania and SA
A debate about GST distribution in Australia is a debate about our future as a federation. Some states – notably Western Australia – contribute far more than their fair share to the national purse. Others – notably South Australia and Tasmania – take far more than they give.
For example, WA gets about 68c in the dollar back from the Federal Government, while SA gets around $1.30.
It’s obvious that horizontal fiscal equalisation is unfair, and that the GST has moved beyond an Australian ‘fair go’ and more towards an inequitable redistribution of wealth.
While there has been talk of the more economically productive states seceding from the Commonwealth in the past, now economists, futurists and legal minds are increasingly discussing the benefits of removing those ‘vampire’ states from the nation of Australia.
This is not an easy conversation but - as Paul Keating is rumoured to have said – it is a conversation we have to have. A conversation that in all likelihood will lead to a referendum.
A referendum that would likely end with SA, Tasmania, and possibly the Northern Territory being ousted from the bosom of the country.
These are the places that have not fulfilled their part of the federation deal. Through inefficient governance, a lack of natural resources (or inability to capitalise properly on said resources), they are a burden on the other states and territories.
The tough part of this is that without the endless flow of money from the other states, Tasmania particularly is likely to wither and die.
Add an ageing population into the mix and suddenly you have a state heading for a grim future indeed.
The Gillard Government is set to review GST distribution – and at the same time it is trying to push through its health reforms.
These two moves will exacerbate the schism that is emerging. The richer states will want a bigger share of the health pie – but the poorer states will not survive without a disproportionate slice themselves.
Within the Constitution there are provisions for de-federalisation. The point is clearly made in Section 3.2.4 that should the future prosperity of the nation as a whole be at stake, the principles of a united country should give way.
Have no doubt, the fight will be fierce. But ultimately Australia must recognise that in this, as in all things, the greatest good for the greatest number must triumph.
The way forward is as a geographically smaller but undoubtedly richer Australia.
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