Autumn means football, falling leaves and budgets – lots of budgets. Right now, treasurers around the country are diving down the back of every government department couch they can find, looking for change, writes the Financial Review.In his mid-year review, Wells announced the government would start taking $471.5 million in dividends out of WorkSafe. So once WorkCover has collected money from employers in premiums and from its investment pool, and paid out claims, it will pay any leftover money to the government to spend on anything it likes.Whoop-dee-do, there’s your surplus…
WorkCover raid adds insult to injuries
Autumn means football, falling leaves and budgets – lots of budgets. Right now, treasurers around the country are diving down the back of every government department couch they can find, looking for change.
Leading off, as always, are the Victorians. The Baillieu government will hand down its second budget on Tuesday week.
Victorian Treasurer Kim Wells has complained loudly about many things, including that the commonwealth will not tell him how much money he will have to work with.
One obvious way to fix this would be for Victoria not to insist on handing down its budget the week before the federal government does likewise.
For a sophomore, Wells has been particularly active in his hunt for money and has already happened upon it in some interesting places.
In his mid-year review, Wells announced the government would start taking $471.5 million in dividends out of the Victorian WorkCover Authority over the next four years.
So once WorkCover has collected money from employers in premiums and from its investment pool, and paid out claims, it will pay any leftover money to the government to spend on anything it likes.
This is akin to a tax on businesses that is simply collected by WorkCover instead of the State Revenue Office. Another way of considering it is to say that by taking money out of WorkCover, the government is reducing its wherewithal to reduce premiums.
As Labor has screamed about a “raid” on WorkCover, the government has argued that all it is doing is aping the practice that applies to the Transport Accident Commission. Billions of dollars have been pulled out of that body over the past decade in dividends and it is quite similar in its construction to WorkCover.
As upper house Liberal MP Philip Davis noted in the debate on legislation effecting the change this week: “If any member of this place can look themselves in the mirror and make an argument that there is anything materially different about the two schemes, then I would be very surprised indeed.”
OK Phil, I agree. So why is it that the government is taxing motorists who pay money into the TAC?
Here one is confronted with an argument that money ploughed into general revenue is used, in part, to help achieve road safety outcomes.
If this were the logic, then the money should be ring-fenced for that purpose. It’s not.
Another argument in government circles is that if a government agency such as WorkCover earns more than it needs, then it is appropriate to lick that cream for other purposes.
Finally, advocates also argue that if the schemes were to end up needing a bailout, it would be the government getting the bill. That is to say – if we get the downside we should get the upside.
These cases ignore the fundamental structure of these agencies. These are compulsory insurers, their mandate to collect premiums is to fund the consequences of accidents. Those premiums are not collected to fund the re-election of governments.
The bigger, far more serious, point here is that it shows state governments are still obsessed with chasing revenue through tricks and gimmicks rather than real reform.
Victoria’s Treasury, which would have the world believe it is at the forefront of reformist thought, unsuccessfully pushed the WorkCover raid for years under Labor. Meanwhile, the Henry review’s forceful recommendations on structural reform of state taxation go unheeded.
Instead, the state treasuries and their political masters act as though Ken Henry farted in the lift on the way to the budget lock-up. Sure, the states cannot effect the changes needed on their own. But how about some ideas, guys?
Instead, we will have the dispiriting annual search through the tomes of budget papers around the country over the next couple of months, toting up the lifted licence fee here, the boosted dividend there, and saying, whoop-dee-do, there’s your surplus. And we will have to endure boasting about “economic management”.
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