Fresh twist in GST debate

The GST’s corrective measures will boost WA’s financial position in coming years, if the current system remains unchanged.

Just when you thought the argument over the distribution of the proceeds of the GST was dead, buried and cremated, fresh life has been injected into the controversy by a newly aggrieved source – the coalition government in NSW.

On the surface, the fact that the ‘premier state’ is now visibly upset with the process is good news for the west. But Western Australia will have to play its cards right to ensure that, should there be any adjustments aimed at a fairer distribution of the spoils, the state does not sign up to another bad deal.

Concerns in NSW surfaced in that state’s recent budget. The treasurer, Gladys Berejiklian, was pleased to announce a projected surplus for 2016-17 of $3.7 billion. She also expressed serious concerns, however.

Echoing a point made in WA by Treasurer Mike Nahan, Ms Berejiklian said the greatest challenge in coming years would be dealing with falling revenue growth.

“One of the main drivers of this reduced growth is a significant forecast fall in our share of GST, which makes up around 25 per cent of our total revenue,” she said.

“Ironically we are the victims of our own success when it comes to the GST.

“NSW is forecast to receive just 81 per cent of our per capita GST share by the end of the forward estimates, a historic low and down from the 95 per cent we receive in 2015-16. Next year NSW will endure the biggest single-year loss due to a change of relativity for any state since the GST began.

“Had NSW kept its share of the GST pool at 2014-15 levels – which was just under what our per capita share would be – we would have received more than $10 billion extra GST revenue over the next four years than what is forecast in the budget.”

Dr Nahan would not have known whether to laugh or cry after reading of the NSW predicament. It’s something he has been hammering for years, with no success.

The irony is that both he, and shadow treasurer Ben Wyatt, know that WA’s worst years under the inequitable GST formula are over. After this financial year (2016-17), the only way is up.

Noting that the 2016-17 allocation is only 30.3 per cent of the state’s population share (well below NSW), WA’s budget papers add: ‘The 2016-17 grant ($2 billion) is the second smallest GST grant received by Western Australia since the GST commenced, above only the $1.9 billion in 2015-16.

‘Western Australia’s GST grants are forecast to increase to $6 billion by 2019-20.’

So the budget problems of whichever side wins the state election next March will be greatly eased by this ‘miraculous’ GST comeback.

That’s why WA will have to be extremely vigilant over any Sydney-based push to rejig the GST formula. The current structure’s sluggish corrective mechanism is finally poised to help ease the state’s financial woes. Any change must at least accommodate that fact.

Security outsourced

DESPITE the state government’s patchy record on the asset sales front, Corrective Services Minister Joe Francis is pushing ahead with privatisation and outsourcing within his own department. And there is growing competition for the business.

The government recently named British-based service provider Sodexo as the preferred operator for WA’s new 256-bed women’s facility at Hakea Prison in Canning Vale, which is due to open in December.

Sodexo, which already provides services for the mining and resources sector in the Pilbara, has a track record in operating prisons. It manages five prisons in Britain with 5,000 prisoners, 800 of whom are women.

The company has emerged as a competitor for prison contracts with another foreign-owned service provider, Serco, which had been transporting prisoners for several years. Serco became embroiled in controversy after some highly publicised escapes.

These escapes, and other gaffes linked with the company’s management contracts in the new Fiona Stanley Hospital at Murdoch, have become highly political, with the Labor opposition pursuing the issue along with relevant unions.

Tenders have now been called for a new contract to move prisoners between jail and the courts. The latest available report on the cost of the service was $57.9 million for 2014-15.