Scott Morrison’s GST shake-up could rip $5.5 billion from NSW warns Treasurer Dominic Perrottet
STATE Treasurer Dominic Perrottet has unloaded on his federal counterpart over changes to the GST, complaining that NSW would be ripped off billions of dollars for performing too well.
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NSW Treasurer Dominic Perrottet has blasted the Morrison Government for its new GST deal, which he says could leave NSW taxpayers up to 5.5 billion dollars worse off.
A slide show presented by Australia’s state Treasurers to federal counterpart Josh Frydenberg on Tuesday night, and obtained by The Daily Telegraph, shows how collectively NSW, Victoria, Queensland, SA, Tasmania and the ACT could be between $9 billion and $14.7 billion worse off by 2026 under the GST shake-up.
Mr Perrottet said the Morrison Government’s claim that no state will be worse off under their new carve-up of the GST did not account for property prices weakening in NSW, which is already happening, or the mining sector picking up again in Western Australia — at which point WA would not have to share the benefits with the other states.
“The Commonwealth has modelled one scenario which shows no state is worse off but in reality it is possible, more likely probable, that as a result of this change the taxpayers of NSW will be worse off to the tune of billions of dollars if this guarantee (that each state won’t be worse off) is not put into law,” he said.
“If the Commonwealth were fair dinkum about no state being worse off, they would have no problem enshrining that in law and protecting the states, like NSW, who have been doing the heavy lifting for decades.”
The Coalition Government’s GST shake-up, pitched as the biggest in two decades, poured an extra $7.2 billion into the funding pool and introduced a GST floor of 70c per person per dollar of GST, which increases to 75c in 2024.
Its formula is based on the strength of the NSW and Victorian economies.
Mr Frydenberg is refusing to give the states a legislated guarantee they’ll be better off — yet he maintains they will be, with NSW receiving an extra $351 million.
Prime Minister Scott Morrison yesterday said the GST shake-up was simply a fairer deal for every state: “We’re putting more than $1 billion in forever, indexed to ensure that every state and territory is better off.”
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But modelling prepared by Victorian Treasury, on behalf of the state treasurers, shows NSW would be $5.5 billion worse off, and Victoria $4.6 billion, by 2026 if there was another mining boom in WA.
This is because of how the Commonwealth has calculated the formula to protect the western state from a future downturn. However, that new formula means it can also keep more of the benefits during a boom and distribute less among the nation, while NSW still needs to support the other states.
NSW’s share of the GST would also be impacted by weaker property prices, Mr Perrottet said, which would see a further slowing of stamp duty receipts.
“The taxpayers of NSW have always done the heavy lifting in supporting smaller states,” Mr Perrottet said.
“I don’t believe it’s our role and responsibility to support inefficient states, like Queensland, who do not take on the reforms that we have done in NSW and also states like WA who don’t plan for the future.
“When times were good, at the height of the mining boom, WA racked up spending on their credit card and now expect the taxpayers of NSW to pay the bill.”
Over the next few weeks, Mr Perrottet hopes to “work constructively” with Mr Frydenberg to see the GST legislation include an amendment that ensures no state will be worse off under the new GST deal.
“We will be prosecuting the case to ensure the taxpayers of NSW are not negatively affected by changes proposed to fix Western Australia’s issues,” he said.
Victorian Treasurer Tim Pallas said the new GST deal was a “pure and simple political fix” aimed at shoring up seats in WA at the expense of other states.