Productivity Commission to Review GST Distribution, Sparking State Clash
CANBERRA – The Productivity Commission will undertake a thorough review of the Goods and Services Tax (GST) distribution system, including the $60 billion windfall Western Australia has received since 2018, potentially reigniting tensions between states and territories. The review, announced today, will examine the current arrangements and consider alternative models for allocating GST revenue.
The review comes as Western Australia defends its current share of the GST, arguing the existing system prevents a return to previous inequities. WA currently receives approximately 71.5 cents in the dollar, a meaningful improvement from prior to 2018 when it received as little as 30 cents. The WA government estimates around $2.5 billion of its GST revenue is redistributed to other states and territories annually.
WA Treasurer Rita Saffioti stated the 2018 reforms were crucial, saying, “Without the 2018 reforms, WA would be left with a grossly inadequate and unsustainable share of GST, undermining our ability to invest in the critical economic infrastructure and support services required.” The state has established a dedicated “fairness fighter” team within its Department of Treasury to respond to the Productivity Commission’s review.
Federal treasurer Jim Chalmers criticised WA Liberal leader David Janetzki for blaming the Commonwealth for state budget issues. ”David has made a habit of trying to blame the Commonwealth for his own problems in his own budget,” Mr. chalmers said. “It’s not a new thing that treasurers would like more money from the Commonwealth.”
New South Wales Treasurer Daniel Mookhey welcomed the review, arguing the current system is overly complex. “Doing nothing means Australia will be stuck with a wierd system that no one can understand, let alone explain, much less support,” he said. Mr. Mookhey advocated for a per-capita distribution of GST, with federal grants used to support smaller states.
The GST is a 10 per cent tax on most goods and services in Australia. Revenue collected is distributed to the states and territories, with the aim of reducing fiscal disparities. the Productivity Commission’s findings are expected to inform future negotiations on GST revenue sharing.