Hon Colin Barnett MEc MLA — Premier calls for change to GST distribution

Premier Colin Barnett has renewed calls for the Federal Government to address the inequities in the distribution of the Goods and Services Tax (GST) which are stifling the Western Australian economy.

“The imbalance in the GST distribution has reached absurd levels and is a major issue for the State’s economic stability and security,” the Premier said.

“Without secure GST revenue, it becomes increasingly difficult to continue to build the State and pay for essential education, disability and health services for a growing population.”

WA’s share of GST revenue will fall to 38 cents in the dollar this year and, based on current projections, could fall to 11 cents in the dollar by 2017-18.

“The GST arrangements have become completely out of balance. The system is flawed and failed,” Mr Barnett said.

The Premier said if WA received GST revenue on a ‘per capita’ basis, it would be $3.7billion better off this year.

Mr Barnett said contrary to some public perception, this was not a problem that the previous State Labor Government had also had to deal with.

“Between 2001 and 2007, WA received between 94c and 104c for every dollar contributed to GST,” he said.

“Since the GST was introduced, the biggest grant WA ever got was in 2007-08 when we received $3.98billion. Today we get $2.26billion.”

The Premier acknowledged that WA was a prosperous State and accepted that it was completely appropriate for wealthy States to support others in the Federation.

“This year $496million of the money collected from West Australians goes to Tasmania and $746million goes to South Australia. But people may be surprised to learn that $598million goes to Queensland, which is a relatively wealthy State, and $142million goes to the ACT,” he said.

“WA taxpayers also supported the Northern Territory to the tune of $1.73billion this year.”

Mr Barnett said his argument was not with the States but with the Federal Government, which distributed GST revenue through the Federal Grants Commission.

“At a minimum the Federal Government should accept responsibility for its own Territories,” he said.

“The failure to address the issue is affecting the Federation. We could get to a situation where WA has almost no economic relationship with the Commonwealth.

“And this absurd arrangement is also holding up the economic development of the State, which has huge benefits for the whole Australian economy.”

This year WA, Victoria (88 cents for every dollar) and New South Wales (97.5c) will also get less than their population share would demand. By comparison Queensland gets $1.08; South Australia $1.29; Tasmania $1.63; the ACT $1.24 and the Northern Territory $5.66.

The Premier said the four big States all agreed that the GST distribution needed to be reformed, which could be easily done by the Federal Government.

“While the States are all required to agree on changes in the way GST is collected (its rate and application), changes to the way it is distributed can easily be remedied by the Federal Government,” he said.

“We would be happy to settle for a floor around 75c in the dollar and distribute the rest to the other States.”