State premiers say Federal Budget is a kick in the guts

AN $80 billion cut to federal grants for schools and hospitals over a decade has sparked a near-rebellion from states that suspect Canberra is trying to “starve them out”, forcing them to seek an increase to the 10 per cent goods and services tax.

The premiers — almost all Coalition members — are incensed at the move outlined in the Coalition’s first budget to slash health and education grants in coming years and force them to make up the shortfall.

NSW Liberal Premier Mike Baird described the move in Tuesday’s federal budget as “a kick in the guts”.

The premiers are demanding an immediate special meeting of the Council of Australian Governments after attending a COAG meeting in Canberra just a fortnight ago at which there had been no mention of the massive cuts coming their way.

They said yesterday the Prime Minister, Tony Abbott, had placated them with assurances of an orderly process of two white papers — one on taxation including the GST and another on improving the functioning of the federation that would also look at the role of the GST because it is a purely state-directed revenue stream.

Voters, too, are angry at the tough-love austerity measures in the budget, many of which represent broken promises.

A Roy Morgan consumer pulse SMS poll conducted yesterday found high levels of disapproval among voters on all sides with 76 per cent of Liberal supporters saying the budget did not advantage them or their families. Just 24 per cent thought it did.

Among Labor supporters, 96 per cent believed they were worse off because of the decisions.

South Australia’s Jay Weatherill, the only Labor Premier, branded it the budget was “cruel political hoax”, he said, was based on deception and lies.

Mr Weatherill has backed a push to force the COAG meeting, but there is no sign of Mr Abbott giving ground.

Queensland’s LNP Premier Campbell Newman said “we’re all in agreement that what the government is doing in relation to health and education is not acceptable”.

Adding to the concerns of premiers is the likelihood of cost-shifting from the federal government when a new $7 co-payment to visit a doctor pushes more patients into hospital emergency departments instead of GP surgeries.

The Treasurer, Joe Hockey, and Mr Abbott yesterday put the onus firmly on state governments to argue for changes to the GST to make up the funding shortfall.

Mr Abbott pointed to coming white papers that would examine the tax system and the federation.

Mr Hockey said that because the states receives every dollar of the GST, they would “have to run the argument”.

“They want to increase funding in their areas of responsibility, then they’ve got to run the argument on the GST,” he said.

“The states don’t want to be associated with the pain of raising taxes for the increased expenditure in their areas of responsibility.”

Mr Newman said he had spoken with state colleagues, including Mr Baird, Victoria’s Denis Napthine, Mr Weatherill and Northern Territory Chief Minister Adam Giles.

“We want to get together first to confer on these matters, he said.

“We’re calling on the PM to hold an urgent or emergency COAG meeting.

“This whole thing seems like a wedge to get the states to ask for the GST to be raised.

“We’re prepared to take responsibility, full responsibility, for health and education, but we need proper secure revenue streams so that our populations, states and territories, can get the services they deserve.”

Mr Baird, who has previously advocated reform of the GST, yesterday predicted the cuts to health and education would bring forward debate about a push to rise in the GST so states would have the money to do their jobs.