Colin Barnett's Budget and WA and Commonwealth relations

Sarah Burnside has written a thoughtful piece in New Matilda about the political theatrics displayed by WA Premier Colin Barnett and his ability to exploit the  natural hostility West Australians have for Federal Governments in Canberra, particularly Federal Labor Governments.

Sarah argues that Colin Barnett's decision in the State Budget to increase state mining royalties is one of a long line of showdowns over the years between the West Australian Government and Canberra. It  is also a potent political ploy that has created problems for both Federal Labor and the WA Labor Opposition. Sarah writes:

Last week — in an exception to the general rule that state budgets are of little interest to the nation at large — the WA Liberal-National Government announced an increase to mining royalties, eliciting criticism from the federal Government and delighting the Opposition. 

The royalty increase was provocative in light of the proposed minerals rent resource tax (MRRT). In cutting a deal prior to the 2010 election, the Government promised that any future royalty increases would be rebated once the MRRT was imposed in 2012. Thus it looks a lot like WA gazumped Federal Labor by incurring a debt on the Commonwealth’s behalf........

.................The Government disagrees. Julia Gillard has confirmed that adjustments will be made to infrastructure spending to Western Australia to "protect the federal budget". Martin Ferguson, who confirmed that the government would honour its deal with the mining industry, criticised the increase as a "short term grab for cash" which may be "to the eventual disadvantage of the West Australian community". Wayne Swan has disputed the numbers: the WA Government claims that the increase will represent $2 billion over the next three years but Swan argues that there is "a real doubt" as to the accuracy of this prediction.


In any event, as business reporter Michael Pascoe pointed out, the Commonwealth Grants Commission process adjusts monies given to the states against the revenue they raise themselves. Pascoe charges that Barnett has "wilfully damage[d] his own budget … to score a petty political point against Canberra, recording the most Pyrrhic of victories". This is politics-as-theatre; in the next act the Premier, a picture of outraged innocence, characterised Swan and Gillard’s remarks about infrastructure spending as a threat.

The dispute puts the WA ALP in a difficult position. Leader Eric Ripper stated rather vaguely that if the federal government "threatens infrastructure spending…that would show a complete lack of understanding of how politics in Western Australia works." 

This stand-off has been brewing for some time, as illustrated by complaints about WA’s GST share: of each dollar of GST revenue generated within the state, it receives about 68 cents. In late March, in what was seen as an attempt to placate the mining states, Gillard announced a "full scale review" of GST revenue allocation. Barnett was not mollified. In April, he charged that Tasmania had "become Australia’s national park", asking "what right is there to simply take some of the spoils of the hard work in other states?" The presence of iron ore within state boundaries seems increasingly to be viewed as the result of some special virtue on WA’s part — rather than of luck and geography"

WA miners spend their money everywhere except where the mines are

image courtesy of the ABC

 The mining and resource companies are always telling us that local economies and local communities benefit from all the money spent by those who work in the mines. 

In the Pilbara and Kimberley  region of WA 78% of mining salaries earned in the region are not spent in the region. The reason is the fly in fly out workforce.

Compare that figure to Queensland where 39% of mining salaries are spent outside the area.

For every $100 earned by miners in those regions, workers in the social welfare and health sectors earn $48 and workers in the retail trade earn $29. 

Those other workers actually live in the Pilbara and Kimberley towns and have to survive the massively inflated costs of living, housing and basic good and services that are driven up by the mining boom, without the huge salaries of their mining counterparts. 

They also live in towns suffering from the lack of long term investment by governments, the mining companies and the private sector in an adequate level of social infrastructure and public goods and services.  And they face the health, social and environmental consequences of living in close proximity to industrial plants and mining sites.

The boom economy does not reach many of those who have to live in the shadow of the mining industry.

Bruce Petty and the power of the mining companies in Australian politics

image courtesy of Bruce Petty and The Age

When the superich and the miners mount the barricades

image courtsey of Bruce Petty and the Age

There they were in the Perth CBD on the back of their flatback truck claiming to be fighting to protect the hopes and dreams of millions of ordinary Australians.

The billionaires and millionaires, the super-rich and the suit-wearing Terrace corporate types with their placards and speeches railing against the super profits tax and those nasty communists and socialists in Canberra wanting to get their greedy hands on "their profits".

There they were, the billionaires, the super rich and the already wealthy protesting about making less money.

They cited great philosophical statements about how all good men must fight evil and defended their right to exploit and profit from the "common wealth" as a righteous cause against evil. And there was one of Australia's richest men dressed in the garb of an ordinary mine worker. And who could not notice the Liberal parliamentarians on the barricades alongside their political paymasters. Ah the irony of it all.

Cartoonist Bruce Petty as always, says it better than I can