GST lemons!

The WESTERN AUSTRALIA PARTY‘s campaign to fix the GST is a per capita share of GST revenue collected by Canberra and paid to the states and territories – no strings attached.

PER CAPITA SHARE

Six states and territories receive more GST than their per capita share as this graph from CGC shows. WA (-5.7%) and NSW (-4.6%) are the only states that receive less.

A per capita share GST formula is easy to understand, stops Australia from being a welfare nation on the back of GST handouts, and the negative effect of pokies used to exploit gamblers and their addictions as revenue windfalls for all states except WA.

GST per capita share 2018

 

 

 

 

 

LABOR’S GST FIX

Labor’s proposal (April 2018) is for a 70 cent GST floor using $1.6 billion infrastructure fund as compensation to WA for its low GST share.  The fund is a “de facto” level of 70c in the dollar, without taking any money from other states.  This fix is a GST LEMON. Modelling show the money could run out a year later after a Labor government came to power, Andrew Burrell, WA Chief Reporter, Perth, 11 April 2018. Click here>>>

GRANTS COMMISSION’S GST FIX

The Commonwealth Grant’s Commission’s Horizontal Fiscal Equalisation report (May 2018) recommended a model base on equalisation to the average state.  Under this model WA would receive an extra $7 billion over the next 8 years or $875 million each year, hardly enough to pay the interest on WA’s debt and a shortfall to the $7 billion per year base on a per capita share.  The Commission assumes all states will exploit revenue from gambling and pokies. This fix is a GST LEMON.

LIBERAL GST FIX

Liberal’s proposal is to fix a 70c to 75c in the dollar floor to deliver WA $4.7 billion in extra GST cash over 8 years or $587.5 million per year, again like Labor, it’s not enough to pay the interest on WA’s annual interest payment on debt, and it’s not $7 billion per year under a per capita share of the GST. This  fix is a GST LEMON.

Q: Does the GST still need fixing?

Yes, while other states use our GST to balance budgets and pay down debt:

  • WA has nearly $40 billion in debt and an interest bill of $1.3 billion per annum.
  • WA is the ONLY STATE to receive less than 83 cents in the dollar of GST revenue since 1999, and the only state to receive the lowest amount at 30 cents in the dollar.
  • WA is closing services and robbing Peter to pay Paul – Moora College, WA Camp Schools, etc.
  • The GST formula rewards states that exploit gambling revenue and pokies. WA does not.
  • WA increases payroll tax which impacts on jobs.
  • Payroll tax is harmful to WA small business
  • MRIT being used to prop up WA’s credit rating.  This $500 million tax pool is meant to fund public open space and land for transport – roads and rail.

GST Lemons!

 

Truth about Commonwealth financial support for WA

GST welfare statesOther States have claimed that Western Australia has historically benefitted from the distribution of Commonwealth grants – principally GST grants and its predecessors (financial assistance grants, tax reimbursement grants and special grants paid in recognition of State disadvantages).

However, for most of the 20th century Western Australia’s export orientated economy was heavily disadvantaged by Commonwealth tariffs which were set up to protect the manufacturing industries of the Eastern States.

The extra funding received by Western Australia in this period was effectively compensation for Commonwealth tariff policies, and indeed the Commonwealth Grants Commission (which recommends the distribution of GST grants among States) was set up in the 1930s partly in response to concerns about Western Australia’s disadvantages from federation, including tariffs.

Since sustained tariff reform began in 1988-89, Western Australia has been a net contributor to other States through the distribution of GST grants and their predecessors. The following table shows the subsidies received by Western Australia (i.e. funding additional to Western Australia’s population share of GST grants and its predecessors), both in nominal terms and present value terms (adjusted to 2017-18 dollars for the time value of money).
Nominal + Present Value
$b     $b
1988-89 +0.2 +1.4
1989-90 +0.2 +1.2
1990-91 +0.3 +1.2
1991-92 +0.3 +1.1
1992-93 +0.3 +0.9
1993-94 +0.2 +0.6
1994-95 +0.1 +0.4
1995-96 +0.1 +0.2
1996-97 -0.0 -0.0
1997-98 -0.0 -0.1
1998-99 -0.0 -0.1
1999-00 -0.1 -0.3
2000-01 -0.1 -0.2
2001-02 -0.2 -0.3
2002-03 -0.2 -0.3
2003-04 -0.1 -0.3
2004-05 +0.1 +0.2
2005-06 +0.1 +0.1
2006-07 -0.0 -0.0
2007-08 -0.3 -0.5
2008-09 -0.7 -0.9
2009-10 -1.0 -1.3
2010-11 -1.5 -1.9
2011-12 -1.4 -1.7
2012-13 -2.2 -2.6
2013-14 -3.0 -3.3
2014-15 -3.6 -3.9
2015-16 -4.3 -4.5
2016-17 -4.3 -4.4
2017-18 -4.4 -4.4
Total -25.7 -24.0

Furthermore, the subsidy that Western Australia now provides through HFE is just one part of Western Australia’s contribution to the Federation. More broadly, Commonwealth revenues derived from Western Australia (such as GST and company tax) exceed the Commonwealth spending on Western Australia (such as GST grants and welfare payments). Based on analysis by the Western Australian Department of Treasury, using latest available data, Western Australia’s net contribution was around $21.7 billion in 2015-16 (details are reported in Appendix 11 of Western Australia’s 2017 18 Budget Paper No. 3). Western Australia is estimated to have provided a net contribution to the Commonwealth since 1986-87.

The above issues were discussed in Western Australia’s first submission to the current Productivity Commission HFE Inquiry, which can be found here (see pages 12 15):
http://www.treasury.wa.gov.au/uploadedFiles/_Treasury/Publications/Western-Australias-Submission-to-the-Productivity-Commissions-Inquiry.pdf

Join the Party, spread the word and correct the misinformation!

GST for WA