07/11/2014 - 15:19

Federalism change floated

07/11/2014 - 15:19

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The inclusion of gambling revenue in Commonwealth Grants Commission funding is one of a number of suggestions to reform Australia’s federation, following the release of a recent federalism paper by the Committee for Economic Development of Australia.

Federalism change floated
OFF THE RAILS: Including gambling revenue in grants calculations could almost pay for MAX light rail, according to federal MP Alannah MacTiernan.

The inclusion of gambling revenue in Commonwealth Grants Commission funding is one of a number of suggestions to reform Australia’s federation, following the release of a recent federalism paper by the Committee for Economic Development of Australia.

The paper has been released as the federal government prepares to undertake a broader review of federalism, after a number of initial ‘issues’ papers were released this year.

Former secretary of the Department of Prime Minister and Cabinet, Terry Moran, joined federal member for Perth Alannah MacTiernan and former premier Richard Court at a recent forum to present ideas for reform.

Mr Moran recommended including the usage of land taxes to fund public transport, extending road use charges, handing over fuel tax revenue to states, keeping GST revenue in states where it is raised, and assigning a portion of income tax to states for management of schools.

He also recommended hypothecating an increase in the GST to 12.5 per cent for state spending on public hospitals.

Mr Court supported the allocation of future petroleum rent tax revenues from LNG projects in a 50:50 split between the states and the federal governments.

Ms MacTiernan, a former state government minister, took a different approach, saying there was a simple adjustment that could be made with minimal political brawling.

“We can have endless debate about what the proper carve up of responsibilities is … but it is most unlikely the Commonwealth would ever contract its role,” she said.

A solution, Ms MacTiernan said, would be to include gambling revenue in Grants Commission calculations for GST distribution.

Western Australia currently receives only $229 million in revenue from gambling taxes, around $87 per capita, substantially less per person than any other state.

Victoria expects to raise nearly $312 per capita in 2014-15, while New South Wales and South Australia follow on $261 each.

However revenue from this form of taxation is not included in assessed state revenue in the grants process, which Ms MacTiernan said costs WA around $413 million.

Ms MacTiernan said it was bizarre that iron ore royalties were included while gambling revenue was not.

“There is no policy merit in incentivising states to expand gambling,” she said.

“We should not be penalising WA for its responsible bipartisan anti-pokies position.”

A 2007 study undertaken by Glenn Withers & Anne Twomey found that Australians were $4,577 per capita better off under the federalist system, a figure that could be doubled with a better separation of federal and state powers.

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