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STATES MUST PAY FOR ANTI-FEDERAL DECISIONS On the face of it, the Victorian government’s decision to extend Covid-19 lockdown restrictions and pursue a health strategy at all costs – that is, without any apparent assessment of the potential severe economic and social consequences – demonstrates an unprecedented level of policy recklessness. By ACAPMA CEO Mark McKenzie. Despite pointing to ‘extensive and complex’ health modelling, the Victorian government announced its lockdown extension decision without any evidence of having performed simultaneous modelling of the likely impact on the Victorian economy – and the future livelihood of all Victorians. Various studies released by third parties since the announcement have estimated that the extended lockdown will likely result in the destruction of around 350,000 jobs and may contribute to more than 2,100 additional deaths over the next five years (as a result of cancer patients deferring treatment because it is simply too difficult to access treatment services). This observation begs an obvious question: how could any Australian government make such a narrow decision without considering the potential economic and social harm to its population? The answer is simple. The decision was taken knowing that the federal government’s JobKeeper safety net would largely cushion the state’s economy against the severe economic impact on the livelihoods of Victorians. The federal government has separately estimated that 60 per cent of the forecast JobKeeper payments during the December 2020 quarter will be paid to Victorians. This is despite the state accounting for 25 per cent of the national population, around 31 per cent of federal tax contributions, and 40 per cent of contribution to national GDP. So, in effect, the Victorian government was able to make a ‘health-centric’ decision that imposes severe economic consequences on the state’s population because it knew the economic costs of this decision would be shouldered by the taxpayers of all other Australian states and territories. Within this context, it’s also worth noting that other state governments (ie, Queensland and Western Australia) are making similar unilateral decisions about border restrictions that have a severe impact on their economies, with the federal taxpayer funding the costs of mitigating against these decisions, too. This disaggregation of the nation’s economy has caused many to reflect on the constitution of Australia and the notion of federation, with some suggesting there is urgent need to review this mechanism given the apparent willingness of various state governments to put the national economy at risk for largely political purposes. But such arguments are difficult to progress. They would involve lengthy and complex High Court actions. More importantly, they would likely lead to an endpoint that would see far greater damage done to the national economy over the medium to long term than current forecasts. An alternative response would be to adapt the current Covid-19 compensation mechanisms of the Australian government in a manner that caps future federal contributions to the economic repair of a state/territory at a level commensurate with the contribution of that state/territory to the national economy. Given that some state governments have effectively made a unilateral decision to suspend the principles of the federation, such decisions should carry federal consequences. Why, for instance, should the taxpayers of NSW fund the costs of economic harm in Victoria caused by unilateral and apparently economically reckless decisions of the Victorian government? One approach would be to cap federal government contributions to state/territory economic repair (via programs such as JobKeeper for example) using the same proportions used for the allocation of GST revenues to all Australian states. This doesn’t mean that the residents of affected states/territories should be deprived of urgent assistance, but rather, the difference between a state or territory’s share of federal economic assistance and the total amount needed would be funded via a loan to the state or territory government involved. The recent debate about a national definition of hotspots being used as a rationale for a harmonised approach to border management is a case in point, with several premiers blatantly ignoring the national interest. If individual state or territory governments decide to make decisions outside national cooperation, then they should be required to pay the costs of economic harm. It’s time to make all Australian governments accountable for making Covid-19 decisions that are in the health, economic and social interest of all Australians – not just their own voter base. ACAPMA PETROLEUM INDUSTRY REPORT About Mark McKenzie Mark holds formal qualifications in engineering (BEng) and business (MBA). He has 30 years of varied experience in private- and public-sector roles, with much of this time spent addressing strategic issues and public policy for the road transport, conventional fuels and alternative fuels industries. Email him at markm@acapma. com.au or go to acapma.com.au. About ACAPMA First established in 1976, the Australasian Convenience and Petroleum Marketers Association is the peak industry association representing the interests of most businesses that comprise the downstream petroleum sector in Australia. Membership of the association ranges from large corporations to small family owned businesses, including fuel wholesalers, fuel distributors, fuel retailers, petroleum contractors and petroleum equipment suppliers. For further information about the nature of petroleum marketing in Australia, contact the ACAPMA Secretariat on 1300 160 270, or email assist@acapma.com.au. SEP/OCT, 2020 CONVENIENCE WORLD 75