Transparency a major concern

THE GST may have proved a bonanza for State governments, but the level of transparency has raised the eyebrows of Australian public policy observers.

The University of Melbourne’s Neville Norman took a pointed swipe at the Federal Government recently when in Perth addressing the Institute of Chartered Accountants conference. In his address, Mr Norman complained about what he sees as a lack of transparent record keeping in relation to the level of GST being collected.

He maintained that, while the GST was a Federal Government tax, unlike other tax streams, the Commonwealth failed to account for the GST in the budget papers. Just a small section, Statement 11 of the 2002-03 Budget papers includes GST revenue in its figures, not as a separate item, but lumped in with other general taxation revenue, while GST payments dished out to the States are incorporated with grant expenses out.

Likewise, the State governments do not treat GST as a separate revenue stream but record the GST revenue as current grants and subsidies, Mr Norman said.

Institute of Public Affairs director Mike Nahan believes it is clear that the Government was “hiding the damn thing”.

“It should be treated as a cash revenue by the Commonwealth, there’s no doubt about it,” Dr Nahan said.

“The GST is a tax yet no-one claims it as a tax.

“They are definitely receiving more than they expected. The GST is much more robust than they initially expected.”

Dr Nahan said there was a number of influences leading to the overrun in GST revenue inflow. The first was that the economy was performing better than expected; secondly, it was collecting more efficiently and pulling more money out of the economy than was expected; and finally, the treasury is historically conservative in its forecasts, which has the effect of keeping a lid on spending by government and possibly leading to a budget surplus.

It is estimated that the States will receive $29.4 billion in GST revenue in 2002-03. WA will collect more than $2.8 billion during the year.

Estimated GST revenue in 2001-02 has been revised by $50 million since the mid-year Economic and Fiscal Outlook 2001-02. For the current 2002-03 year, treasury has revised upward GST revenue by around $520 million.

Mr Norman said the real concern was that this unaccounted revenue was still being soaked up in extra spending above previously forecast spending, rather than being passed up in income tax cuts.

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