23/04/2012 - 16:01

Current GST system is terminal: Porter

23/04/2012 - 16:01


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Current GST system is terminal: Porter

Western Australian Treasurer Christian Porter has welcomed an interim report on the carve-up of GST revenue, which has flagged changes to a system Mr Porter says is broken and in need of reform.

"I’m very positive about what’s in the report," Mr Porter said.

"What this report absolutely puts beyond issue now is that the present GST distribution is terminal. The system is terminal."

"The question then becomes how long before it is formally pronounced as deceased and when do we get a new system."

The review, being conducted by Nick Greiner, John Brumby and Bruce Carter, flagged several potential changes to the way GST revenue is distributed.

These include simplified capital assessments, recognition of mining-related infrastructure, increasing transparency and predictability and minimising data inaccuracies caused by “back-casting”.

Mr Porter said that he was pleased that the committee had put forward two broad options for changes to the current equalisation arrangements. The minimalist change suggested would give greater acknowledgement to state spending on mining infrastructure and other mining costs, while the possibility of a complete re-writing of the equalisation system was also put forward as another option.

“All of the types of changes they’re suggesting, whether they are small or large are beneficial to WA,” he said.

Mr Porter noted that the panel did not back the suggestion of placing a floor on each state’s share of GST grants as WA had suggested, but was positive about “limiting relativity changes,” which he said was very similar and would mean that no state should have a real loss of GST revenues year to year.

“If that were in place now, we wouldn’t have lost $600 million,” said Mr Porter.

The panel also encourages the Commonwealth Grants Commission and other stakeholders to review the current mining assessment “at the earliest opportunity”, noting that WA could lose more GST than the revenue it gains from changes to royalty arrangements on the iron ore industry.

Mr Porter said that the government would be writing to the Federal Treasurer to highlight the urgency that the panel has placed on changing the current two-tier system of royalties.


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