29/05/2019 - 15:16

WA more than paying its way

29/05/2019 - 15:16
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Recently released numbers show Western Australia’s net contribution to the the federation was a whopping $15.5 billion during the 2018 financial year, while also indicating a long running debate about federal health funding cuts in the state was off the mark.

Western Australians earn higher incomes than those in other states. Photo: Attila Csaszar

Western Australia’s net contribution to the the federation was about $15.5 billion during the 2018 financial year, according to the latest budget documents.

The Commonwealth government received $56.8 billion in tax revenue from WA, while federal expenditure in the state totalled $41.3 billion.

On a per capita basis, that was about $5,987 heading east.

“In 2017-18, WA’s estimated contribution to the federation was much greater than that of NSW and Victoria, the only other net contributors,” the budget documents said.

“On a per capita basis, WA’s net contribution was more than four times that of NSW and around 31 times that of Victoria.”

Queensland was the big winner, with $14.3 billion flowing in.

Breaking down WA’s net contribution, about $3.6 billion was through personal income tax, $5 billion through company tax, and $3.7 billion through the GST, with the remainder comprised of taxes such as the fuel excise, for example.

There’s positive news on the GST front, after the federal government legislated a reform package last year.

But the numbers also suggest WA will be the biggest beneficiaries from the cuts to income tax legislated last year and a further round of reductions due to come before parliament.

The first seven-year, $144 billion package included an extended low income tax offset, increased the threshold for the 32.5 cent tax bracket from $37,000 to $41,000, and abolished the 37 cent bracket.

All up, it would mean an effectively flat tax system, with 94 per cent of taxpayers projected to be on a marginal rate of 32.5 cents in the 2025 financial year.

The second round, announced in this year’s budget, includes a move to lower the 32.5 cent rate to 30 cents, increase the threshold between rates from $41,000 to $45,000, and double the tax offset.

About 1.1 million Western Australians reported a taxable income in the 2017 financial year, according to the most recent Australian Taxation Office data.

Roughly 853,000, or 75.4 per cent, earned incomes between $37,000 and $200,000, and as such would benefit from the higher threshold and cut in marginal rates.

WA has the highest portion of taxpayers between these incomes of any state, although the ACT and NT are higher still.

Using a different measure, gross average weekly full-time earnings, WA comes second only to the ACT, at $1,813.

A person on that income will be $2,639 a year better off from the 2025 financial year onwards, the federal budget suggests.

Health debate

The documents also put an end to a big dispute about health funding.

It comes after accusations of cuts to schools and hospitals, a major part of its federal election campaign in WA, with Premier Mark McGowan fronting a radio advertisement claiming the coalition had cut $77 million from hospitals.

Responding to an enquiry from Business News, a spokesperson for Mr McGowan repeated the number and said there would be a further cut of $359 million in the next six years.

But the state’s own budget says otherwise.

About $2.4 billion will be received in Commonwealth specific purpose health grants in the 2020 financial year, up 4.1 per cent on the year to June 2019.

It will rise further to hit more than $2.8 billion in the 2023 financial year.

That compares with $1.9 billion in the 2013 budget.


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