PM tells premiers no deal

JULIA Gillard may be unpopular, but that doesn't make her silly - at least not so silly that she can't tell when she is being sold a dump.

So she was absolutely right to reject the plea by the premiers that she should fund the National Disability Insurance scheme by instituting a tax levy, in the manner of those imposed for Medicare or flood relief.

This apparently helpful suggestion was in fact the biggest hospital pass in recent political history and if she had fallen for it Gillard would have been monstered beyond mortal aid.

Of course the premiers thought a new federal tax was a good idea - or most of them, anyway. They weren't going to have to raise it.

Queensland's Campbell Newman, who brought it up over dinner at The Lodge, was positively lyrical, describing it, improbably, as a possible Obama moment for the Prime Minister.

South Australia's Labor premier, Jay Weatherill, was almost as enthusiastic; he had done the figures, he said, and a one percent increase would cover the lot.

The Commonwealth Treasury, somewhat more down to earth, calculated the actual cost as an average jump in income tax of $850 a year for every household - a bit more than three times the impact of the carbon tax.

And the mere mention of that particular impost should have sobered everyone up.

It may have had an effect on at least two of them. Victoria's Ted Baillieu refused to join in the general excitement and Barry O'Farrell from New South Wales was heard to murmur that the idea would only work if everyone agreed to it. At which point Gillard opined that possibly, just possibly, Tony Abbott might have reservations.

Well, yes. Abbot has spent the last four years inveighing against new taxes of any kind - except, of course, his own proposed impost on big business to pay for his lavish proposals for child care for the rich, but that is a great economic reform. Anything that comes from the government is, by definition, unconscionable, and we're not just talking about new taxes to be paid for by the people. A tax on the super profits of the miners, a tax on the emissions of the big polluters - all are equally unacceptable.

So it took less than a nanosecond of consideration by Gillard to conclude that any attempt to pay for her plan through increasing revenue, whether by a tax, a levy, an impost, a tariff, a duty, a surcharge, a gabelle or just charging corkage, would lead to terrible consequences. Abbott would bombard the media screaming "Great big new tax... grey pig newt axe ... griping nut aches ... creeping nerve gas ..." steam coming out of his ears and spittle and venom flying in all directions. So she just said no.

Of course, she was lambasted for it by The Australian. Even the normally sensible Peter van Onselen berated her for making a poor decision, for an opportunity squandered. The stalemate was not the fault of the premiers, who were happy to grab the billion dollars that Gillard had put on the table, but were too mean to stump up a couple of hundred million between them as a contribution towards trial areas, a simple earnest of good faith and support.

No, it was Gillard's idea, she was the one playing politics, and she should have taken Abbott on - she would have won, with all the premiers, even the four conservative ones, locked in behind her.

But even before Abbott and his shadow treasurer, Joe Hockey, confirmed that they would go in with all guns blazing if Gillard so much as considered the idea, there were a couple of things wrong with this analysis. The first was that only two of the four conservatives were actually on the record in support of the brain bubble, Newman, the proposer, and Colin Barnett from Western Australia. The best that could be said for Baillieu and O'Farrell was that they had not actually spoken out against it. Not quite the lieutenants you would want behind you in the mother of all battles. And even Newman and Barnett had to be a trifle suspect; their zeal seemed to have at least as much to do with their eagerness to avoid having to fork out anything from their own coffers as with a selfless concern for public policy.

But rather more importantly, if the NDIS is to develop as a serious attempt to tackle the problems of disability, the states will have to be involved at a great many levels in administration, service and delivery. Indeed, on past form, they will insist on it. That being the case, it is sensible to involve them, however peripherally, in the funding so that they will have some skin in the game right from the start. It has always been understood and accepted that the Commonwealth will do the vast bulk of the financial heavy lifting, but that does not absolve the states from all responsibility.

In fact, it took Baillieu and O'Farrell just twenty four hours to come to the same conclusion, when both dropped their hardline opposition to Gillard's demands and started haggling. Baillieu eventually agreed to give the Commonwealth everything it had asked for - $40 million over four years - while O'Farrell met Gillard half way with an offer of $35 million. As a result both Geelong and the Hunter will host trials of the scheme, along with sites in Tasmania, South Australia and the ACT. In the deep north Newman continues to play Son of Hillbilly Dictator, while Barnett insists that the Wild West must remain a law unto itself. In the fullness of time, when something like sanity returns to the Australian political scene, a more permanent funding arrangement for the county-wide NDIS will have to be negotiated, and it probably will involve an increase in taxation, either direct or indirect. In the meantime, Gillard's stubbornness has, for once, paid off - she has got her trials and the states - well, most of them - are on board. Even van Onselen has had to admit, grudgingly, (paragraph nine of another lecture) that her original "poor decision" has been vindicated. Coming from The Australian, that's about the best she could hope for.

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