08/09/2017 - 06:30

WA $90bn losers from federation

08/09/2017 - 06:30

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Western Australians paid nearly $90 billion more in taxes to the federal government than they received in spending in the four years to June 2016, according to estimates revealed by the Department of Treasury in yesterday’s budget.

WA $90bn losers from federation
A significant amount of WA's output effectively flies east for the benefit of other states. Photo: Attila Csaszar

Western Australians paid nearly $90 billion more in taxes to the federal government than they received in spending in the four years to June 2016, according to estimates revealed by the Department of Treasury in yesterday’s budget.

The enormous contribution to the federation shows that it is more than just the GST payment mechanism that is tilted to favour the eastern states, and comes after a week of renewed debate around secession.

In the 2016 financial year, Western Australians contributed a net total of $21.7 billion to other states and territories, about $8,500 per person.

The Treasury estimated WA taxpayers contributed $53.3 billion to the Commonwealth, while only $31.6 billion was returned through spending.

That includes adjustments for contributing to defence and the national deficit.

About $4.2 billion of the net contribution was through the GST, but nearly $6.5 billion was redistributed through income tax, and a further $3.7 billion by company tax.

Petroleum royalties and the fuel excise were worth a combined $1 billion.

The next most significant contributor was NSW, where residents chipped in to the tune of $599 per capita.

The big winners were South Australia, which received $9.3 billion net, and Queensland $8.1 billion.

Adding up the numbers across the previous four years, it shows WA contributed $89.7 billion in net terms to other states, even as the state’s domestic economy contracted significantly and the state government suffered revenue write-downs of more than 10 per cent.

The numbers indicate WA has been a net contributor since the mid 1980s.

A Department of Treasury paper from 2011 fills in the pre-1985 background.

“The historical net Commonwealth support for Western Australia was effectively compensation for Commonwealth policies (particularly tariffs) that penalised primary industry-based (and) export-focused states in the earlier years of federation to the benefit of protected manufacturing sectors of the east,” the report said.

The impact of east-coast-centric protectionism on WA led to the secession referendum of 1933, and the establishment of the Commonwealth Grants Commission, which is at the centre of the renewed GST distribution debate.

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