Published: 13 May 2019

MILLIONS of dollars are being promised by all sides of politics leading up to May 18. From small community organisations desperate for funds to large infrastructure projects, there almost seems to be an unlimited supply. Some promises are actually re-announced funding commitments.

We have seen a National Party Senator promise money as though it was a certainty for many community based organisations, only to mention almost as an afterthought, that they will need to apply for the funds through grant application processes. This is misleading and manipulative.

These grants from a Department with National Party Ministers McCormack and McKenzie might flow to regional bodies.

But most Commonwealth grants flow to or via the State government and are taken into consideration when the Commonwealth Grants Commission decides the annual split-up of the GST pool.

Most grants act to reduce the GST to which we would otherwise be entitled and are little more than GST in advance.

It is important to remember the GST are general purpose grants that we, as a state, spend how we wish.

If we get extra specific purpose grant in one year, it will be clawed back with reduced GST in subsequent years. Effectively we swap a specific purpose grant for reduced GST in the following three years.

We eventually pay for the gift and reduce the money available to use at our discretion.

A specific grant for a particular project in a particular region inevitably leads to less GST money being spent in the rest of Tasmania. A free lunch often means a neighbour has to miss a meal or two.

We should demand to be told how each grant will impact on our GST when announced. Some grants are fully clawed back over time.

One example is black spot funding, used to address problem sections on our roads.

Irrigation grants under the Water for the Future scheme will all be clawed back, yet politicians still plead with us to reward their generosity with a favourable vote.

Some grants are only clawed back 50 per cent. These grants include major road and rail funding, for the Midland Highway for instance. We end up paying for half the gift.

Other grants are fully quarantined such as grants under the Roads to Recovery scheme which have no impact on our GST relativity.

Clawback also occurs with major hospital infrastructure grants like the $340 million to assist with the Royal Hobart Hospital (RHH) rebuild and Commonwealth grants for local NW hospitals.

Most of the RHH money was received years ago and has since been repaid with subsequent GST reductions.

The current government is now trying to fund one of the largest infrastructure projects in the state's history from current earnings. This simply doesn't make sense.

How can the ordinary ongoing operations of government, funding health, education, public safety, justice, etc., be properly funded when such a huge amount is being extracted to pay for an asset with a life of 30-plus years? Imagine trying to pay for a house from three years' earnings.

There wouldn't be much left to put food on the table for those three years.

This is the system of horizontal fiscal equalisation as it's called and is designed to ensure each State and Territory has the same capacity to provide the same (average) standard of services to its residents. The system has recently been reviewed at the behest of Western Australia. But it was just a political fix.

We need a long-term plan for infrastructure spending that straddles election cycles, doing away with the pork-barrel, where the strategic benefits are clearly articulated and prioritised.

A spending plan must be accompanied with a funding plan. An infrastructure grant from the Australian government is not a funding plan for a long-life asset if it's all going to be clawed back in a few years via reduced GST allocations.

Surely there must be issues where all Senators could agree on what's best for this state. They should work strategically with other Tasmanian members to plan for and prioritise infrastructure spending that will create broader community benefit.

This would be much more effective than taking turns, standing in the background of media conferences, mindlessly nodding approval for a grant they know, or should know, will be paid back in a few years.

We need a new approach with real leadership, long term vision and strategic thinking.

We eventually pay for the gift and reduce the money available to use at our discretion.


The Advocate Monday, 13 May 2019





Go Back