EDITORIAL: The case for a higher GST

NSW premier Barry O'Farrell is right about the GST. A strong case exists to raise the rate of the federal goods and services tax from 10 per cent.

Unless the federal system is reformed and the states are abolished, state governments must have more funding certainty.

Ever since they were forced to hand over the power to levy income taxes to the federal government, the states have struggled to balance their budgets. They are subject to demands from their constituents who naturally want ever-improving health and education systems, good roads and public transport, effective policing, dependable water and power and the myriad other services that states provide. But their income-raising powers are notoriously limited.

The states have their good years, of course. Real estate and mining booms, respectively, provide stamp duty and royalty windfalls that give them scope to spend. But when economic conditions contract, the states feel the squeeze in a very immediate and painful way.

The introduction of the GST was a big advance, providing a set pool of money for funding state activities. But the national slump in retail sales and consumption means that pool is smaller than before.

To make things worse, the real estate market is subdued and there are signs that the lucrative mining boom may at last have passed its peak.

Those factors provide the real background that explains most of the state government's cost-cutting drive.

With revenue down, spending is hard to maintain without risking the state's treasured AAA credit rating. The alternative to cutting spending is raising revenue but moves to lift the mining royalty rate have caused a political storm that will probably result in reduced federal grants to NSW.

Raising the GST would be politically difficult too, and neither the federal government nor opposition appears to have the courage to consider it. But if people don't want their services cut, a higher GST makes sense.

Riding a drone wave

DRONES, it seems, are flavour of the month. And not just in the air.

The attraction of unmanned, remote-controlled aircraft and seaborne vessels are obvious, especially in the case of drone boats that are totally powered by renewable energy sources.

Such boats could stay at sea indefinitely, would require no crew and cost very little to operate and maintain.

Newcastle shipbuilding and engineering firm Forgacs is keen on the idea of building drone boats and no wonder. The defence-related applications of marine drones are almost as diverse as those of airborne versions. Surveillance is the most obvious job for delegation to drone boats, and the company promoting the vessels has suggested that a fleet of 300 could guard Australia's northern shores better and more cheaply than conventional navy ships.

Drone proliferation is becoming a topic for wide debate, as defence forces, police services and even criminal networks are starting to find useful applications for these tireless, unsleeping sentinels.

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