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Barnett proposes per-capita carve-up for GST cash

Premier Colin Barnett has proposed the bulk of GST revenue should be distributed on a per capita basis, with the remainder distributed to the states based on need.

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Although I live in WA I agree with the SA Premier. The carve up should be based predominantly on need, and we can't afford to have short memories. What goes around comes around, and will no doubt come around again. The resource boom won't last forever. How sympathetic will the other States be next time we need "propping up"?

Sheridan RL, strategy consulting
SRL has long argued for a per capita distribution. Using 60% as the base, this means that WA would be guaranteed about 6% of the total pool plus its allocation of the discretionary 40% (SA would get 4% before discretionary). This sets the floor for WA at 66% and 44% for SA. SA currently takes around 9% so would be capped at just below 9% under the Barnett proposal. Hence SA's unhappiness ! The problem with the GST argument is that it is backward looking: State allocations are argues on the basis that someone had more in the past (WA being subsidised historically). The better argument is to allow States to keep more of what they generate but encourage States to spend the larger sums on productive capital investment for the future and not to allow them to use the GST funds to service current costs.

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