The Commonwealth Grants Commission has recommended that Western Australia's share of GST grants should be cut by $89 million because of increases in the state's revenue raising capacity.
The Commonwealth Grants Commission has recommended that Western Australia's share of GST grants should be cut by $89 million because of increases in the state's revenue raising capacity.
Treasurer Eric Ripper said this was a slap in the face for hard working Western Australians and businesses.
Under the CGC's equalisation formula, states with stronger growth in revenue capacity have their Goods and Services Tax (GST) grant shares reduced in favour of states with weaker growth.
"Western Australians have worked hard and as a result we have one of the best performing economies in the country," Mr Ripper said.
"In return, the CGC is cutting $89million in grants funding, effectively rewarding poor economic management in other States."
The Treasurer said recent claims that New South Wales and Victoria were subsidising WA just did not stack up.
"Other States talk up their GST contributions, but stay quiet on the total picture," he said.
"If you take all Commonwealth taxes and revenues sourced from WA, less what is given back, we are net contributors to the Federation of about $3billion per annum.
"This equates to about $1,500 for every Western Australian, more than double that of either NSW ($720 per capita) or Victoria ($520 per capita). All the other States receive a net subsidy."
The Commission said its latest review had "tracked a significant shift in the relative fiscal capacities of the states".
"Notable has been a strengthening of the capacity of Queensland and Western Australia."
Specifically, it said WA's relative revenue raising capacity had increased, particularly from stamp duty on conveyances and mining revenue.
"Its relative costs of providing services in government schools education, hospital inpatient services and mining, fuel and energy services also fell," the Commission said.
Despite the review's findings, the Commission estimated that WA's share of GST revenue would still increase from $4.53 billion in 2005-06 to $4.76 billion in 2006-07.
This was because of an overall increase in the GST pool and an increase in the state's population.
On a per capita basis, Western Australia is expected to receive $2,307 in 2006-07.
NSW ($2,005) and Victoria ($2,056) will receive lower per capita grants while other states and territories including Queensland ($2,351) will receive higher per capita grants.
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Western Australia penalised for economic success.
Western Australians are being penalised $89million for their economic successes.
Treasurer Eric Ripper today said the Commonwealth Grants Commission's (CGC) decision to cut funding to WA was a slap in the face for hard working Western Australians and businesses.
"Western Australians have worked hard and as a result we have one of the best performing economies in the country," Mr Ripper said.
"In return, the CGC is cutting $89million in grants funding, effectively rewarding poor economic management in other States."
Under the CGC's equalisation formula, States with stronger growth in revenue capacity have their GST grant shares reduced in favour of States with weaker growth.
The Treasurer said recent claims that New South Wales and Victoria were subsidising WA just did not stack up.
"Other States talk up their GST contributions, but stay quiet on the total picture," he said.
"If you take all Commonwealth taxes and revenues sourced from WA, less what is given back, we are net contributors to the Federation of about $3billion per annum.
"This equates to about $1,500 for every Western Australian, more than double that of either NSW ($720 per capita) or Victoria ($520 per capita). All the other States receive a net subsidy."
