Feared 11c scenario 'won't happen'
The much-ballyhooed doomsday scenario of WA's GST share falling to 11� in the dollar now will not happen, WA Treasurer Mike Nahan says.
The softness of the iron ore price, which could result in lower royalties of more than $1.5 billion a year to WA Treasury coffers, means that WA will not lose as much GST to the other States as had been feared.
WA's GST share has an inverse relationship with mining royalties, so a downward revision of iron ore price assumptions in December's mid-year review means there will be a corresponding upward revision of GST revenue.
The Budget assumes iron ore will trade between $US122 a tonne and $US155 a tonne over the next four years. The current price is about $US80 and every US dollar represents about $50 million of royalty revenue.
But there is a catch. The Commonwealth Grants Commission's GST distribution system has a three-year lag, which means WA will not see a GST benefit of the present iron ore softness for at least that long.
"It will be higher than 11¢ in three years time . . . There is likely to be an increase in GST, but nowhere near that of the reduction in iron ore revenue," Dr Nahan said yesterday.
"I can tell you this year and next year, there will likely be no change."
On ABC Radio yesterday, Premier Colin Barnett hinted the Government was likely to project "deficits".
Shadow treasurer Ben Wyatt said Mr Barnett was "confessing to his financial sins".
