New Prime Minister Tony Abbott has immediately shot down calls from Colin Barnett to increase the GST to ease the financial pressure on WA.
Mr Barnett, fresh from losing the State's AAA credit rating this week, last night said the new Federal Government had to revisit the GST.
He said the pool of the GST funds was not growing as fast as expected, forcing States like WA to wind back on frontline services.
“I don’t expect a white knight to come from Canberra and fill up our treasury with money but I do believe that Tony Abbott as prime minister ... does have to show some leadership on fixing some of the fiscal imbalance of the Australian federation,” Mr Barnett told ABC TV last night.
“Unfortunately, one of the tough jobs Tony Abbott is going to have is to step up to the plate and take some leadership on the federation and front and centre of that will be the GST issue,” Mr Barnett said.
“I’m sure he doesn’t want to do that, but I don’t think he has much choice.”
The Government has committed to a review of the tax system including the GST. But that review, yet to be set up, is expected to take an extended period to report.
And a spokesman for Mr Abbott said the Government, which had ruled out an increase or change to the GST during the election campaign, was not going to break that promise.
“There will be no change to the GST, full stop, end of story.”
But Mr Barnett says the prime minister will face mounting pressure to put the GST back on the table.
“All of the states will say the GST is not growing sufficiently quick enough to fund basic services like health and education,” he said.
“I pose the question: do Australians really mind that much if the GST is 10 per cent or 12.5 per cent if it means maintaining high quality health and education, disability services and alike?
“I suspect the Australian people are mature enough to say ‘we’ll cop that’.”
ALP leadership contender Bill Shorten said Mr Abbott would come under immense pressure from Liberal premiers like Mr Barnett to vary the GST.
He ruled out any change to the tax by Labor.
“We don’t see the need to put an extra tax on bread and milk,” he told Sky News.“We don’t see the need to increase the cost of living for Australians.”