Another time bomb left behind by a politically & fiscally incompetent current member of the World Wide Speakers Group and sometime Liberal MP for Cook, Scott John Morrison

 

Then Prime Minster Scott Morrison & Treasurer Josh Frydenberg - political mates and housemates before the Liberal-Nationals Coalition sank the ship of state. IMAGE: The Australian, 26 August 2020

 

On 5 July 2018 then Australian Treasurer & Liberal MP for Cook Scott Morrison unveiled his plan to overhaul the Goods & Services Tax (GST) state distribution scheme.

This involved changes which ‘would protect all taxpayers, update the grants commission process and deliver certainty to States and Territories. “This problem has been kicked down the road for too long and it is time we now got on and fixed it,” he said. “A fair and sustainable transition to a new equalisation standard will be ensured, through an additional, direct, and permanent Commonwealth boost to the pool of funds to be distributed among the States."

By 12 November 2018 the Australian Coalition Government now lead by Prime Minister Morrison introduced Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Bill 2018 which was duly passed by Parliament and became law on 29 November 2018.

On 25 February 2019 Treasurer John Frydenberg put his signature to this contentious document.

Thus a political and fiscal time bomb with a relatively long fuse was activated…...

The Age, 14 November 2022, p.3:

A deal put in place to placate Western Australia when its share of GST revenue was tumbling is on track to cost the nation's taxpayers 10 times more than forecast, helping drive up federal government debt and interest payments to record levels.

Originally pulled together by then-treasurer Scott Morrison in 2018 before being put through parliament by his successor, Josh Frydenberg, the deal that expected to cost $2.3 billion is now on track to cost more than $24 billion. [my yellow highlighting]

WA, which delivered four seats to Labor at the May election on the back of a 10.6 per cent swing, is vowing to fight to keep the arrangement, due to expire in 2026-27.

Morrison struck the deal at a time when WA's share of the tax pool had fallen to an all-time low of 30 cents for every dollar of GST raised within the state. Its iron ore royalties were effectively being redistributed among the other states and territories based on a Commonwealth Grants Commission formula that takes into account each state's revenue sources and expenses.

Under Morrison's deal, from 2022-23 WA must receive a minimum of 70 cents in the dollar before increasing to 75 cents in 2024-25. When the policy was put in place, it was expected iron ore prices would fall and WA's share of the GST pool would therefore rise. Instead, prices have soared.

The Morrison government ensured other states and territories wouldn't be worse off, which requires the top-up funding for the deal to come from outside the $82.5 billion GST pool.

It was originally forecast to cost federal taxpayers $2.3 billion over three years, including just $293 million in 2021-22, but the surge in iron ore prices has meant more top-ups and for longer.

The October budget revealed that last year, the deal cost $2.1 billion and is forecast to jump to $4.2 billion this financial year. By 2025-26, the cost of the entire deal is on track to reach $22.5 billion, with another $2-3 billion likely the year after that.

Throughout the entire period, the budget is expected to be in deficit, forcing the extra cash to be borrowed. In percentage terms, the blowout in cost is larger than the NDIS, aged care, health or defence.

Independent economist Chris Richardson said the deal had been ill-conceived from the beginning with the cost to be borne by future taxpayers.

He said all significant spending programs needed to be properly assessed, including the GST deal.

"Yes, the politics of it are difficult. But we have a whole host of other issues, like the NDIS, and the economics of them have to be dealt with," he said…….

The extra borrowing for the GST deal has contributed to the lift in gross debt, which on Friday reached a record $909.4 billion.

Treasurer Jim Chalmers said the cost of servicing the debt was getting more expensive and was the budget's fastest-growing expense. [my yellow highlighting]

Yet another Frydenberg ministerial blunder disclosed which is still reverberating

The Guardian, 11 December 2018:

The Australian government has permitted the export of hundreds of rare and endangered parrots to a German organisation headed by a convicted kidnapper, fraudster and extortionist, despite concerns the birds could be sold at a huge profit.

An investigation by Guardian Australia has revealed that the Berlin-based Association for the Conservation of Threatened Parrots received permission to export 232 birds between 2015 and November 2018 – more than 80% of all the live native birds legally exported from Australia in the same period.

The exports include threatened species such as Carnaby’s and Baudin’s black cockatoos, worth tens of thousands of dollars each.

The head of the ACTP, Martin Guth, has multiple criminal convictions, including a five-year jail sentence for hostage-taking, extortion and attempted fraud in 1996. In 2009 Guth was sentenced to one year and eight months in prison for seven cases of fraud. In one incident Guth kidnapped two men and threatened to cut their fingers off unless they paid a large sum of money.

A six-month Guardian investigation has found:

·    Export permits for Australian birds specified they were for exhibition purposes only, but ACTP has no facility that is freely open to the public.

·    Export permits prohibited the sale of the birds or their offspring, but private messages on social media reveal native Australian birds apparently from ACTP have been offered for sale for hundreds of thousands of dollars. The German federal agency for nature conservation has said it was aware of those offers.

The Australian government was repeatedly warned of concerns about ACTP by international wildlife authorities, private breeders and the government MP Warren Entsch.

International conservation bodies and scientists have raised questions about the organisation’s activities in other countries, including Dominica, Saint Vincent and the Grenadines and Brazil.

ACTP does not publish its financial records and is not registered with any major international zoological association.

Concerns about ACTP in Australia were raised with the former environment minister and now treasurer, Josh Frydenberg, and the office of the former prime minister Malcolm Turnbull, as well as the environment department. But the government has continued to allow the exports. The latest shipment of 64 birds to ACTP was approved on 12 November.

In December 2017 the government brokered a deal with ACTP that involved the organisation giving $200,000 to the Western Australian government for projects to protect the endangered western ground parrot.

In response to questions from Guardian Australia, the office of the threatened species commissioner, Sally Box, said no such deal would have been reached had it known of Guth’s record…..

Guth’s criminal convictions do not relate to his involvement with ACTP. But the investigation raises serious questions about the oversight of exports of native species from Australia, and the due diligence conducted by international wildlife authorities on a group that has acquired one of the largest collections of rare and endangered parrots in the world.

The Australian parrots, which were bought openly and legally by ACTP from local breeders and birdkeepers, were exported after the environment department agreed to recognise the organisation as a zoo in 2015.

Documents show ACTP obtained a licence to operate as a zoo in Germany in 2014, only months before its application to Australian authorities.

The organisation told the Australian government it ran numerous centres in Germany. None are freely open to the public. Its main premises at Tasdorf, a village 30km outside Berlin, displays no public information other than a mobile phone number. Its location is not advertised and the buildings display no opening hours nor any other indication that the public is welcome to visit….

Germany’s Federal Agency for Nature Conservation (BfN) has confirmed to Guardian Australia it was aware that glossy black cockatoos imported from Australia by ACTP had been offered for sale. It said it had looked into the offers and found the birds had been legally imported and bred, and there were no limits on trade.

But under the terms of ACTP’s Australian permits, the animals and their offspring could only be moved to recognised zoos…. [my yellow highlighting]