Iron ore price slump eats into NSW’s GST pie carve-up

NSW is expected to get a smaller than expected slice of the $57 billion GST pie because of the global collapse of the iron-ore price.

An undated handout photo made available 03 August 2005 shows a worker inspecting iron ore stockpiles at the outback location of Marandoo. Rio Tinto reports a record first-half net profit of 2.17 billion US dollars 03 August 2005. Rio Tinto posted the result, well ahead of market forecasts following a China-driven boom for resources and solid production figures. AFP PHOTO/RIO TINTO/HO (EDITORIAL USE ONLY)

NSW is expected to get a smaller than expected slice of the $57 billion GST pie because of the global collapse of the iron-ore price.

Although state treasurers have failed to reach an agreement on the GST carve-up, federal Treasurer Joe Hockey has indicated the need to prop up Western Australia’s budget.

WA has been hit by what Mr Hockey branded a “perfect storm” of lower tax revenue from falling iron ore prices and a recommendation from the independent Commonwealth Grants Commission that its share of GST revenue be cut.

The commission, which distributes GST revenue, has recommended Western Australia’s share fall from 37 cents in the dollar to less than 30 cents.

“I think most Australians would consider it unreasonable that a state would have a situation where only 30 cents of every dollar spent on the GST by its citizens are sent back to that state,” Mr Hockey said.

The states are due to share $57.2 billion in GST revenue in 2015/16 — up from $53.7 billion this year. The Northern Territory will receive $5.57 for every $1 of GST paid, while WA will get just under 30 cents in the dollar. The top three beneficiaries are NSW ($17.3 billion), Victoria ($12.8 billion) and Queensland ($13 billion).

Although state treasurers have failed to reach an agreement on the GST carve-up, federal Treasurer Joe Hockey has indicated the need to prop up Western Australia’s budget.