States gang up on WA GST plea
Seven States and territories have ganged up to denounce WA’s attempt to overturn the Commonwealth Grants Commission’s recommended carve-up of the GST.
In an extraordinary and unprecedented step, the treasurers of NSW, Victoria, Queensland, South Australia, Tasmania, the ACT and the Northern Territory have jointly written to Treasurer Joe Hockey demanding he not deviate from the Commission’s recommended GST carve-up.
The treasurers – three conservative and four Labor – suggest that any potential rescue package for WA be separate from any consideration of the GST carve-up.
“If external assistance is necessary to tackle Western Australia’s budget challenges, we call upon you to pursue such solutions outside of the GST distribution system,” the State and territory treasurers wrote in a letter to Mr Hockey yesterday.
In the letter, obtained by The West Australian, the treasurers dispute suggestions that the GST split is unfair, as described by WA and a several Abbott Government ministers.
“We are unanimous in our support for the adoption of the Commonwealth Grants Commission’s recommended GST revenue sharing relativities for 2015-16,” they write.
“We believe the Commission’s independent role in recommending GST relativities is vital to the integrity of the GST distribution system, and should be respected.
“The adoption of the Commission’s independent recommendations, in line with historical practice, is the only equitable option, and we are unable to support any alternative distribution method.
“Moreover, the Commission could find no grounds for special treatment for Western Australia.”
The treasurers note that all jurisdictions occasionally have budgetary challenges.
“However, we do not agree that the recent downward movement in Western Australia’s GST share is ‘unfair’ or inequitable,” they write.
“Western Australia’s declining relativity simply demonstrates that the GST distribution system is recognising and responding appropriately to changes in their circumstances, albeit with a lagged time frame.”
The treasurers point out that WA has received about $7 billion in extra GST revenue as a result of the Commission’s “time-lagged assessment methodology” and that WA’s loss in GST payments is temporary.
“Given the ‘zero-sum’ nature of the GST distribution system, it is unacceptable to make significant one-off changes to address an issue for a specific state, at the expense of all others,” they write.
“This is unlikely to be considered reasonable by the citizens of jurisdictions other than Western Australia.”
They conclude: “In closing, we unanimously urge you not to compromise the GST distribution system to address what is ultimately a short-term timing issue for one state in our federation.
“If external assistance is necessary to tackle Western Australia’s budget challenges, we call upon you to pursue such solutions outside of the GST distribution system.”
