Western Australia and Victoria have gained the biggest boost to their share of the $65.8 billion GST carve-up for next financial year, while the Northern Territory has taken another hit under changes to the distribution announced by Treasurer Scott Morrison today.
WA, which has long argued it gets short-changed in the GST carve-up among the states, had expected to receive an increased return from 34 cents to 45 cents from every dollar it sends to Canberra.
The allocation will be slightly higher than that at 47 cents, adding about $1 billion extra to state coffers year-on-year and almost $150 million more than had been expected. But WA remains the only state or territory that receives less than half of the GST it generates.
It was the second-biggest GST increase behind Victoria, which has been handed an extra $1.8 billion in GST revenue for the 2018-19 financial year. The state’s share increased from 93 cents to 98 cents in the dollar on the back of strong population growth.
Queensland was the biggest loser in the GST breakdown, with its take falling by more than $400 million for the year and its return in the dollar falling from $1.18 to $1.09.
The Northern Territory also saw its share drop, by $136 million this year, with its return falling from $4.66 to $4.26.
GST breakdown state by state 2018-19
|State||GST share per dollar||GST share %||Total GST distribution $m|
The NT result prompted Mr Morrison to admit there was more work to do in reforming the GST distribution formula as the Productivity Commission prepares a May report on the system of horizontal fiscal equalisation.
South Australia was a winner in today’s distribution, pocketing an extra $467 million, and a slightly higher return from $1.43 to $1.47. NSW’s share was up $519 million thanks to the bigger total GST pool, even though its return is down from 87 cents to 85 cents.
The ACT’s share remained unchanged.
Here’s the full GST distribution table for 2018-19. WA will get $3.3 billion or 47 per cent of its per capita share. South Australia, with roughly one million fewer people than WA, gets $6.7 billion
Mr Morrison said the Government had “stopped the drop” of GST share in WA.
“We’ll continue to have those discussions with Western Australia, but equally I know Western Australians don’t just want band-aids on this,” Mr Morrison said.
“They want to see this issue thoroughly addressed. And we’re still on that track.”
‘Slap in the face’: Wyatt
WA Treasurer Ben Wyatt attacked the increase as “yet another slap in the face to the good people of Western Australia.”
“This is now the sixth year in a row that Western Australia has not even received half of its population share of the GST,” he said. “No other state has received less than 67 per cent since 1942-43.
“Western Australia’s continued low GST relativity reinforces that urgent reform is needed.
“Any increase I welcome, but it still highlights the need for that reform, and that report from the Productivity Commission we wanted to happen,”
Mr Wyatt earlier said the increase would make a relatively small difference in the state’s overall budget.
State debt is still set to hit $42.9 billion by 2020, before the Government estimates it will finally start coming back down.
Consecutive deficits are predicted until 2020-21 when a return to the black to the tune of $926 million is expected.
The WA Chamber of Commerce and Industry (CCI) said WA continue to be “ripped off”.
“This is hardly an improvement from a very broken GST system,” said CCI chief economist Rick Newnham, adding $3.6 billion would still be taken off WA to give to other states.
“States like Tasmania and South Australia now receive about three and four times the share of GST that WA receives,” he said.
“There’s no acceptable justification for this situation.”
A ‘devastating blow’ to the NT
Northern Territory Treasurer Nicole Manison said a cut of $136 million dollars’ worth of GST payments from the Commonwealth was a “deep and devastating blow” to the upcoming Territory budget.
Ms Manison said the Territory had the highest proportion of disadvantage in the country and deserved a higher share of GST as a result.
“We know that we have the biggest challenges in this nation when it comes to remote deficits,” she said.
“Particularly when it comes to social disadvantage. We’ve got he highest proportion of Aboriginal people in this nation. We have got the biggest infrastructure deficits in this nation.”
GST increase ‘long overdue’: Pallas
Victorian Treasurer Tim Pallas welcomed the huge boost to his state’s share of the GST pool, saying it was long overdue.
But in comments that echoed Mr Wyatt, Mr Pallas said the Commonwealth was still short-changing Victoria.
“There are two principle factors that have led to this increase in GST,” he said. “One is population growth and the other is the fact that the Commonwealth have been very light-on in making their contribution to the infrastructure spend in this state.”
South Australian Treasurer Rob Lucas said the distribution showed the system worked, and WA’s share of GST had started to rise significantly after a decline in mining royalties.
Mr Morrison said the challenge for GST distribution formula was to be able to absorb “tectonic shocks”, such as the end of the resource boom, which saw “$80 billion ripped out of the Australian economy”.
“We need to ensure the formula does not produce so much volatility that it makes it hard for states, particularly smaller states, to be able to have some certainty in their budgeting,” he said.