With friends like the Labor states, who needs enemies

With these issues smouldering, the big stoush awaiting national cabinet next week will be the NDIS.

Albanese in opposition had vowed either a royal commission or something similar. What we got was arguably worse than doing nothing.

The mood within the federation, however, is turning, as it was always going to turn.

Albanese’s vision that national cabinet with its surfeit of Labor premiers and chief ministers, would be all sunlit uplands, is beginning to blur.

This week, the states, led by a destitute Victoria, went public with a demand that GST top-up payments introduced in 2019, and set to expire in financial year 2027, be made permanent. The top-up payments, currently $5 billion a year and rising, are a consequence of the Turnbull government’s violation of the GST’s walled garden so carefully constructed by John Howard and Peter Costello.

Endless bleating by Western Australia about it not receiving its fair share eventually led then-treasurer Morrison and finance minister Mathias Cormann to buckle and promise WA’s share of the GST would not fall below 70¢ in every dollar the state contributed.

This floor, of course, came at the expense of every other state each time, under the distribution formula, WA should have been receiving less than 70¢.

So, as the WA government ran around boasting that its surplus budget was the product of economic genius, rather than mendicancy and digging up dirt and selling it, the other states and territories were compensated from federal coffers.

Not only did this corrupt the GST self-funding and distribution model, it ultimately didn’t help Morrison. It was WA that abandoned the Coalition and pushed Labor across the line at the May 2022 election.

The Albanese government is learning, too, that at the end of the day, all the states care about is the states and that belting Canberra is an easy source of votes.

While Treasurer Jim Chalmers will kick the GST issue into the long grass given it doesn’t have to be resolved immediately, the other battles with the states are more urgent, including politically.

The states, especially Queensland and NSW, are cranky at Canberra for its cancellation of 50 infrastructure projects because of the recent audit of more than 800 promised projects on the books.

Queensland Deputy Premier Steven Miles was in town on Wednesday with a delegation of unhappy mayors and industry leaders. Not good for the feds who hold only five of the 30 seats in Queensland, more so given the state Labor government faces its own election by next October.

With these issues smouldering, the big stoush awaiting national cabinet, which meets next Wednesday, will be the NDIS.

Hopelessly out of control and resembling nothing like the scheme it was envisioned to be, the National Disability Insurance Scheme (NDIS), whose cost is $42 billion a year and rising rapidly, needs to be reined in, or it will collapse.

Even Albanese says its “on the brink”. The states have had in their possession for some time now the review into the scheme commissioned by NDIS Minister Bill Shorten, so they know what’s coming.

They need to take responsibility for funding kids with autism and other early learning difficulties that the NDIS was never envisioned to cover.

Autism diagnoses have rocketed since the condition became eligible for NDIS funding and now accounts for 35 per cent of NDIS participants, while other developmental difficulties account for another 12 per cent.

For the government, its economic credibility is at stake. At the May budget it set a goal of reducing the NDIS growth rate from 14 per cent to 8 per cent – still double the original estimate – by 2026.

Yet, based on nothing more than a growth goal, the government banked $60 billion in NDIS budget savings in the seven years to June 2034. It is the single largest savings measure in the budget’s medium-term outlook.

And it depends in significant part on the states not pushing onto the scheme children with autism and other developmental delays and finding the billions of dollars themselves.

This from the same states that sent Chalmers a letter this week pleading to keep the GST top-up of $5 billion a year.

“This will be a subject of a national cabinet negotiation. It’s up to the Prime Minister and the premiers to work out all of those issues,” said Shorten in what qualifies for hospital pass of the week.

Be assured, the states will demand the GST payments be contingent on any NDIS deal.

For the government, these developments within the federation are not an aberration but just a return to reality.

They just happen to coincide with a shoddy end to the year for the Albanese government, exacerbated by a slump in the polls and its inability to get on the front foot over the High Court detainee saga which has overshadowed the end of year legislative agenda.

On Thursday, it was pretty much reduced to saying Peter Dutton supported paedophiles while the prime minister, who hasn’t held a proper news conference for yonks, began the day pictured behind his desk, pretending to work while wearing a Radio Birdman T-shirt to mark Ausmusic T-shirt Day.

All week, the backbenchers have been dragging their heels while in parliament, the opposition has lost any sense of fear.

During every question time, the opposition’s tone has been one of sheer irreverence, buoyed by it pulling level with Labor in Newspoll, and the government’s missteps.

It’s not just the states which are sensing vulnerability.