Formula used to calculate states’ GST revenue ‘could be more accurate’

EXCLUSIVE: The federal body tasked with dividing the GST’s $55 billion revenue among the states has suggested its data and the formulation for the split could be more accurate.

Treasurer Scott Morrison in April ordered a review of how funds are split up between states. Picture: Kym Smith

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THE federal body tasked with dividing the GST’s $55 billion revenue among the states has suggested its data and the formulation for the split could be more accurate, raising fresh doubts on the already contentious carve-up of the cash stream.

Amid a heated debate about how GST revenues should be split, the Commonwealth Grants Commission has quietly begun asking for consultants to review whether its systems are “the best way of meeting (its) data repository, calculation, analysis and reporting requirements”.

NSW Dominic Perrottet says the current model rewards lazy states.

Tender documents seen by The Daily Telegraph show a number of risks, including whether the “conceptual methods may be flawed”, “data might be of bad quality and/or not fit for purpose” and data not being “accurate, complete, consistent or reliable”.

“The consultancy should focus on the appropriateness, efficiency and efficacy of the current processes,” the request, for a draft report to be delivered by November, reads.

The review comes after Treasurer Scott Morrison in April ordered the Productivity Commission to review how the money is carved up after coming under intense pressure from West Australia and NSW.

WA receives just 34 cents for every dollar it raises in GST revenue, and is demanding a higher share.

However, other states including Victoria and Tasmania are against change.

The Commission told The Daily Telegraph it “acknowledged that, despite the diligent use of (quality assurance) processes, it could not guarantee 100 per cent accuracy in outcomes”.

“Through the consultancy, Commission staff are seeking ways of improving our processes in the interests of continuous improvement,” a spokeswoman said.

The Commission is responsible for recommending how GST money collected by the federal government is split after taking into account different needs of the states such as how remote some of its population live and the strength of state budgets.

NSW Treasurer Dominic Perrottet is pushing for a change to a per-capita model, which could mean billions of dollars more for the state, describing the current arrangements as “a safety net for the lazy states”.

“Why should NSW taxpayers have to foot the bill for governments around the country who aren’t bold enough to embark on reform?” he asked earlier this year.

Tender documents for the Commission’s review show consultants would need to consider how to assess each state’s financial strength.

Other risks identified include the use of incorrect formulas and incorrect data, noting just a quarter of its calculations are audited every year.