GST cure for health crisis: Baird plan includes a $7 billion boost for states

MIKE Baird wants the federal government to give the states $7 billion for much-needed hospital and school funding by increasing the GST to 15 per cent.

Pictured is Manly Hospital's Emergency Department today. Picture: Tim Hunter.

PREMIER Mike Baird wants the federal government to give the states $7 billion for much-needed hospital and school funding by increasing the GST to 15 per cent while compensating low-income households.

He said the increase in the GST from 10 per cent would allow federal Treasurer Scott Morrison to address the $35 billion gap in health funding by 2030, while also delivering income and corporate tax cuts.

This would be based on an agreement to return $7 billion to the states to 2020 to restore health funding, pay for the final two years of the Gonski education package, and renegotiate future funding to 2030 at the Council of Australian Governments in 2020.

Mr Baird (pictured) said the new proposal allowed the federal government to boost the national economy and grow jobs, while ensuring hospitals and schools were properly funded. “What we’ve effectively done, the whole argument of how we get in a position to fund health long term, the federal government argued they want a growth driver. So if the states want health and ­education funding ... this brings the two together to do the same thing,” Mr Baird said.

“If we raise the GST, the federal government takes that revenue to put it into tax cuts — income tax cuts, corporate tax cuts. That will grow the economy. It is an ­incentive to work, and an incentive to ­employ workers.

“You can drive the growth agenda, giving an overall boost to the economy, and as part of that we want to see health funding restored to what it was in 2014.”

Mr Baird said he acknowledged the federal government faced a “massive budget challenge”, but his plan would give the states and the Commonwealth a solution. “It gives the feds what they want,” he said. “It gives them a boost in order to fund health, the No. 1 ­requirement of the states.”

Mr Baird said that in 2020, the states and the Commonwealth could then see the effect of these changes and renegotiate hospital and school funding to 2030.

“The critical issue is health funding. There remains a massive gap in the long term and this gives us the ­capacity to join the feds to address it,” he said.