Victorian treasurer hits out at Productivity Commission plan to overhaul GST

VICTORIA would have missed out on $4.4 billion over five years under an independent plan now being considered to overhaul the GST cash carve-up between the states and territories.

Victorian Treasurer Tim Pallas will fight the GST overhaul. Picture: Alex Murray

VICTORIA would have missed out on $4.4 billion over five years under an independent plan now being considered to overhaul the GST cash carve-up between the states and territories.

New modelling obtained by the Herald Sun exposes the full financial hit to Victoria’s economy under the draft Productivity Commission proposals.

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The state government believes that under one option for GST reform, Victoria would have lost $972 million this year alone, which could pay for 7700 police officers, more than 100 trams or 9300 teachers.

Treasurer Tim Pallas said Victoria was sick of being used as “the milking cow of the Federation”.

The money that Victoria could have lost in one year is enough to pay for more than 100 trams. Picture: AAP Image/James Ross

He will fight the Productivity Commission’s plan at a hearing in Melbourne on Friday, and told the Herald Sun that Victoria would not accept being short-changed on crucial GST revenue used to pay for hospitals, schools and transport infrastructure.

“We’re building the roads, rail and schools Victoria needs as it grows, and it’s time for the Turnbull government to help us rather than using Victoria as budgetary ballast,” Mr Pallas said.

Federal government sources say the commission’s plan is only a draft — with final recommendations due next year — and that any adjustments to the GST formula would likely be accompanied by compensation for affected states and territories.

The commission’s GST review was sparked by complaints from Western Australia about its declining share, which has slumped after the end of the mining boom to 34 cents from every GST dollar it contributed.

Victorian Treasurer Tim Pallas will fight the GST overhaul. Picture: Alex Murray

Victoria gets back 93c in every dollar but has always subsidised the other states and territories to the tune of $86 billion since Federation.

Mr Pallas will argue tomorrow that Western Australia only has itself to blame for its low share of the GST, and that Victoria should not have to pick up the tab for their financial mismanagement.

He said Victoria was already being “dudded” on infrastructure funding.

The state government’s submission to the commission said its draft proposals were unfair and incoherent, and may actually make the GST system more secretive, complex and inefficient.

Prime Minister Malcolm Turnbull has acknowledged Western Australia is getting an unfair deal on the GST but his government is waiting on the commission’s final report before deciding on how it will try to alter the carve-up of $60 billion of revenue every year.

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