Brisbanites squealed when it was revealed that a sub-website of Virgin Airlines dared say that Brisbane was a dreary town. Well, Canberra cops it every day.
Canberra-bashing is a national sport while Queensland basks in the sunshine of Federal Government favouritism.
Or does it?
Well Tuesday’s Budget reveals something contrary to popular mythology. The ACT is doing very well from the Federal funding and Queensland is doing poorly.
It is exactly the opposite as in the early 1970s when then Queensland Premier Joh Bjelke-Petersen blamed the evil Whitlam socialists in Canberra of cruelling Queensland while allowing Canberra fat cats to bask in cream. In fact, Joh had his hand out first of all the states to get the money from whatever social-engineering or quasi-nationalisation program the Whitlam Government had going.
So what has changed? The ACT got self-government not because of some outbreak of democratic spirit, but because the Feds wanted us to pay our own way and have someone else cop the blame. Remember the Whitlam Government lost one of the traditionally Labor ACT seats. The Hawke Government did not want the same thing to happen. The ACT was to be funded like a state. There were some transitional arrangements, but by 1993 the ACT had become part of what is called the Commonwealth Grants Commissions Relativities.
The commission’s object is to ensure Australian citizens get access to similar services irrespective of which state or territory they live in. It looks at the total of Commonwealth money going to the states. Instead of dividing it exactly according to population, it increases some states and territories and reduces others. Let’s say Victoria has 25 per cent of Australia’s population. You would expect it to get 25 per cent of Commonwealth grant money. But no, under the commission’s relativities it might get 85 per cent of what it would otherwise get. This is because Victoria is fairly compact and has a productive climate. In the meantime, Tasmania might get 120 per cent of what it would otherwise get on a strict population basis. This is because Tasmania suffers from extra transport costs of Bass Strait and the hellish wet wilderness of the south-west.
When the ACT joined these relativities in 1993, the commission found a prosperous, productive, compact place with a highly educated, resourceful population.
In 1993 the relativities were: NSW 85.4%, Vic 83.5%, Qld 109.3%, WA 111.7%, SA 122.1%, Tas 148.0%, NT 478.4% and the ACT 86.5%.
In other words, the ACT was up there with the big boys of Victoria and NSW subsidising the other states and territories. Notice how the Northern Territory got nearly five times what its population would otherwise warrant. Notice how WA and Qld are getting subsidised. These states’ Premiers are fond of saying how they are economic powerhouses etc.
Since 1993 things have changed. Queensland has steadily lost its 9.3 percentage point subsidy. Tuesday’ Budget had it down to just 1.07%. WA has fared worse. Its 11 per cent subsidy has been scrapped altogether. Rather than being subsidised, it is contributing to the subsidies of the less prosperous states and territories, particularly the SA and Tas basket cases, to the tune of 7.7 per cent. Those changes can be put down solely to changes in economic and population factors. WA and Qld have been gaining wealth compared to the rest of Australia.
The ACT has had a very different relativities history.
After five years of us subsidising them by up to 14%, Chief Minister Kate Carnell had had enough. The ACT had some special difficulties that meant it should not be treated just like NSW and Victoria. So instead of allowing the Grants Commission to do a bureaucrats’ backroom job, she set her own bureaucrats to work in the form of a special section of the Office of Financial Management. They produced hefty documents and arguments about the ACT special disabilities. We were getting no help for the fact that we inherited a fancy road system, the open-space plan, big space between Commonwealth buildings and a garden city which is a national asset. Carnell persuaded the hard heads of the grants commission that this was a national asset requiring extra national funding.
It worked. The ACT’s relativity, hovering around 88% went to 95% in 1998, 110.2 in 1999 and in Tuesday’s Budget papers the 2000 figure was 114.5%. Instead of us subsidising them by up to 14%, they are subsidising us by 14.5%. It is an astonishing, unheralded turnaround. Please don’t tell anyone lest the jealous politicians of Qld and WA try to get it taken away.
Bear in mind it was done by the Grants Commission an independent body, not by political hacks. But it took Carnell’s initiative.
The ACT has about 1.6% of Australia’s population. Under relativities, in 1993 we got 86.5% of 1.6% of the total Commonwealth grants to the states and territories. In 2000 that will be 114.5% of 1.6% of total Commonwealth grants. To give an idea of how much it means, Tuesday’s Budget total federal Budget grant of $833m given to the ACT would have been a mere $628m if it had been worked out under the 1993 formula, with continuing year-on-year effect.
Do not ask where’s the money coming from, but where’s it going to.