12/03/2009 - 16:30

State GST revenue to be slashed by $311m

12/03/2009 - 16:30

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A federal goods and services advisory body has recommended a $311 million cut in Western Australia's shares of GST revenue for the 2010 financial year.

State GST revenue to be slashed by $311m

A federal goods and services advisory body has recommended a $311 million cut in Western Australia's shares of GST revenue for the 2010 financial year.

The recommendation from the Commonwealth Grants Commission (CGC) prompted Premier Colin Barnett to again call for an overhaul of the federal government's method of calculating GST revenue returned to the states.

The GCG's proposal will see WA's shares of national GST revenue fall from 9.4 per cent in fiscal 2008 to 5.7 per cent by 2011-12.

Mr Barnett said this is well below the state's population share of more than 10 per cent.

"The situation is becoming untenable for WA," Mr Barnett said.

"Within three years, for every dollar of GST that Western Australians pay at the register, we will only get back 57 cents.

"At a time when the WA budget is under pressure, this is an unfair impost our State cannot afford.

"The cut highlights the difficult economic situation WA is in, with declining revenues from all quarters.

"I have written my concerns to the Prime Minister and I will be discussing these issues directly with him when the Council of Australian Governments (COAG) next meets.

"While WA's grant has been cut due to past growth in its revenues, there is no recognition of the massive infrastructure and financing costs faced by the State due to population and economic growth.

"This highlights the need for fundamental reform of the division of GST revenue - not just through the existing Commonwealth Grants Commission review due in 2010, but through a broader rethink of the assessment principles.

"WA accepts the need to protect the interests of the smaller States and Territories. However, the larger States need to work together with Canberra to agree on a broader reform agenda that treats the financially stronger States with greater parity.

"We are working on a range of reform options which we will be discussing with other jurisdictions over coming months and I hope those discussions can be concluded in a spirit of co-operation and bipartisanship."

The financial impact of today's Commonwealth Grants Commission report was in line with Treasury predictions already contained in the Mid Year Financial Projections Statement.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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