A GST deal and the NDIS blew out by billions — but one is sacred

analysis Both the 'worst' GST deal and the NDIS blew out by billions but only one is sacred Welcome back to your weekly federal politics update, where this week Jake Evans will get you up to speed on the happenings from Parliament House. Former prime minister Scott Morrison must have been surprised when he was asked by a reporter in 2022, a few months before the federal election, whether he had "neglected" Western Australia. Morrison, as treasurer, had stitched up a deal in 2018 to guarantee WA a larger slice of the pie from the Goods and Services Tax (GST), which he said would cost the federal budget about an extra $5 billion over about six years. The Coalition had been facing a political backlash in WA, where the mining state's share of revenue from the GST had slipped to 30 cents for every dollar collected because its high iron ore royalties changed the calculation for what the state was owed. Morrison promised the federal government would top-up WA so that it always received a "floor" of at least 75 cents for every dollar it raised, which he expected would cost the federal budget an extra $5.4 billion. Politically, it didn't matter in the end. The Coalition's gift to the west in 2018, dubbed the worst deal in policy history by economists like Saul Eslake, didn't save the Liberal Party from losing five seats in WA at the 2022 election — four of those to Labor, which had made a vow written in sharpie to keep the GST deal. Eight years on, the $5 billion gift to WA has instead cost $23 billion, and is expected to cost $60 billion by 2030. Undertaking a review at the government's request, the Productivity Commission advised the deal should be scrapped, calling it a "costly mistake" that was worsening inequality between the states. It was a rare moment since Morrison's deal that gave cause for critics to hope there could be a slim chance of change. But that was quickly extinguished, as the prime minister looked the $60 billion blow-out in the eye and vowed once again to keep it. Standing next to him was West Australian Premier Roger Cook, who had earlier in the month insulted Productivity Commission public servants as "clowns", "dodgy, deceitful" and "dumb". Treasurer Jim Chalmers later defended them as "really good people", and said Cook's remarks were "unfortunate". But the prime minister said nothing of Cook's comments, suggesting an "economic rationalist" viewpoint was to be expected from a Productivity Commission report commissioned by a Coalition government. Never mind the fact the Albanese government appointed the Productivity Commissioner and wrote the terms of reference for its GST report. Albanese, who credits the swing in the west with delivering him the prime ministership in 2022, is refusing to create an opening for a Liberal (or One Nation) revolt in WA. But angry premiers are warning it could start costing Labor votes among the "clowns" outside WA. South Australian Premier Peter Malinauskas told the Bush Summit this morning his constituents had begun to ask him about the deal. "You can win every single seat in every single seat in Western Australia, but if you don't win a majority of seats in the rest of the country, you still lose," Malinauskas said. The GST deal is a blowout as big as the National Disability Insurance Scheme (NDIS), which was on course to cost about $70 billion a year by 2030, tens of billions more than projected at its inception. Health Minister Mark Butler announced earlier this year the government had made the difficult choice to force some people from the scheme to state-run alternatives, and cut the budgets of others, in order to save about $38 billion over four years and finally slow down growth to a sustainable rate. "These reforms will help make the NDIS safer, clearer and more sustainable, with stronger rules, better safeguards and greater confidence that funding is directed to the supports participants need," Butler said at its passage last week. With the federal budget cash-strapped, in deficit for the next ten years, and the "low-hanging" savings picked already, the government and Coalition were able to find agreement last week to cut back on an expense item costing tens of billions more than first expected. It just wasn't the one that's been dubbed "the worst deal in policy history". More head-butting at national cabinet It has been a turbulent week for Labor. Energy Minister Chris Bowen on Sunday said the government was ready to ride roughshod over the Queensland and Northern Territory governments to see through its plan to force AI data centres to use renewables power to neutralise the massive increase in energy consumption that the data centre rush is forecast to bring. This morning, it was Queensland Premier David Crisafulli and NT Chief Minister Lia Finocchiaro doing a victory lap after forcing a federal government backdown to a "technology agnostic" approach that would allow data centres to still use coal and gas to make their AI-generated deepfakes of Alan Kohler. The government insists it wasn't a backdown — Environment Minister Murray Watt this morning said the government recognised "some states and territories that are in a different situation with state-owned generation". It seems to be somewhat academic, since the three big data centre states are shaping up to be NSW and Victoria by a wide margin, and South Australia coming in third, all where renewables are full steam ahead. There's little suggestion data centre developers are waiting in the wings with plans to support a new coal project that would get their facilities on line. And no government or opposition, federal, state or territory, wants to be the one that killed the golden goose of AI, which promises to bring in more than $100 billion in value over the next decade. But in a fight between data centres and renewables yesterday, it was data centres that won. LoadingDisunity in the rank-and-file Within Labor, there are fissures from a commitment to cut down migration levels by nearly 100,000 to a net overseas arrival rate of 225,000 by 2028. The political squabble over the most appropriate Net Overseas Migration rate tripped up One Nation's most junior MP, David Farley, at the beginning of the week, when he likened the party's migration plans to Labor's, and suggested a figure that would be "at minimum" slightly higher than the federal government's target. His leader Pauline Hanson came over the top to clarify in a tweet that has since been deleted. Four days on it is all clear as mud, with Hanson saying today the party's migration target will in fact be above the 130,000 she had previously suggested, though Farley was also "confused" about how certain visa holders were counted — the Coalition is saying Hanson took three different positions in about as many minutes. But the government is hardly handling it more neatly. Home Affairs Minister Tony Burke was forced to postpone a scheduled National Press Club address, as the government's planned changes to cut down arrivals to reach its target of 225,000 hit a snag. It hasn't been settled in the several cabinet meetings since, and no date pencilled in the calendar for the announcement. With the migration debate a daily occupation, and according to a Sydney Morning Herald poll the single-largest issue driving the One Nation-curious, some policy proposals have found their way into the headlines. After the ABC reported a government plan to make British backpackers work a stint in the country in order to make the popular visa less attractive, the prime minister quickly squashed the suggestion at a press conference yesterday — sealing one escape route for the government to reach its migration target. Now a proposal to cut the nation's humanitarian intake by allowing a four-year lift from 13,750 visas to 20,000 to expire is causing fury within Labor's left faction, national affairs correspondent Jane Norman reports, with the left faction feeling it has ceded enough ground on the issue of asylum seekers and refugees. Labor had only just settled to keep that visa at 20,000 places at its national conference a few weeks earlier. The prime minister, responding to the Australian Financial Review's report of the proposal, said not to believe "everything you read in the Fin". But was it reporters or his own MPs he was telling that to?