WA flags GST rebellion
Faceless Canberra bureaucrats are urging Federal Treasurer Joe Hockey to do nothing about WA's record low share of the GST, leaving the Barnett Government threatening a campaign of disobedience.
The West Australian understands that the Commonwealth Grants Commission has examined - but dismissed - WA Treasurer Mike Nahan's proposal to overhaul the way mineral royalties are treated in the annual GST carve-up.
Asked what WA's response would be to the GST system not changing, Dr Nahan answered: "Basic non-co-operation."
WA is already blocking moves supported by all other States to lower the GST threshold on imported goods.
Unless the commission is overruled by Mr Hockey, WA will get just 30¢ of every dollar of GST raised in the State in the next financial year under the commission's methodology, down from 38¢ in 2014-15. This would result in WA's GST share falling to about $1.7 billion - from $2.2 billion this financial year.
WA's furious complaint is that the GST carve-up for next year is based on an iron ore price of $US123 a tonne, as it averaged in 2013-14. The current price for iron ore is $US48.
The 12-year low iron ore price would punch another $5 billion from the State finances over the next four years.
Dr Nahan, in Canberra for a Treasurers' meeting, proposed the commission change its methodology to stop three-year-old iron ore prices dictating next year's GST distribution. "WA has been a golden goose for other States for many years but the important thing now is not to eat the golden goose," he said.
WA's fallback position has been to push for a 50 per cent "floor", below which no State's GST share could fall, substantially below the 75 per cent once demanded by Premier Colin Barnett.
Failing that, WA has demanded the Federal Government at least freeze WA's share at 38 per cent for two years, by which time the CGC's methodology would have caught up with plummeting iron ore prices. This option would cost the other States about $500 million next year.
South Australian Treasurer Tom Koutsantonis said: "For years WA has received significant benefits from the three-year averaging in GST revenue as a result of its rising royalty collections. Now as royalties are falling, they want to change the rules."
