‘Unacceptable’: Blow-up over government’s proposed changes to GST

THE blow-up over the GST has escalated today, with Australia’s richest state taking an extraordinary swipe at its neighbours.

THE blow-up over the government’s proposed GST changes has escalated today, with Australia’s richest state taking an extraordinary swipe at its neighbours.

Modelling from Victoria’s treasury department has predicted NSW could be $5.5 billion worse off under the federal government’s plan to introduce a floor in GST payments.

Under the proposal, no state would receive less than 75 per cent of its own GST revenue, starting in the 2024-25 financial year.

The plan was hatched to protect Western Australia from the prospect of its GST share crashing back to the mining boom lows of less than 30 cents in the dollar.

Scott Morrison and Josh Frydenberg insist no state will lose money under their new system, and have slapped down the states’ and territories’ unanimous demand for that to be explicitly guaranteed in the legislation.

But NSW and Victoria claim billions will be lost if property prices continue to fall in Sydney and Melbourne, costing them stamp duty revenue.

According to the Daily Telegraph, NSW Treasurer Dominic Perrottet took a blunt shot at some of the other states, suggesting they have been supported for too long.

“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 or responsibility to support inefficient states, like Queensland, who do not take on the reforms that we have done in NSW, and also states like Western Australia who don’t plan for the future.

“When times were good at the height of the mining boom, Western Australia racked up spending on their credit card and now expect the taxpayers of NSW to pay the bill.”

Mr Perrottet’s strong language notwithstanding, the states and territories have been in broad agreement on the issue, and made their position clear at a pivotal meeting with Mr Frydenberg yesterday.

“It’s pretty hard to unite the states and territories when it comes to GST distribution, but Scott Morrison and Josh Frydenberg have managed it,” Shadow Treasurer Chris Bowen said.

“The states united against their arrogant proposal not to assure states and territories that they won’t be worse off in the legislation.

“Scott Morrison and Josh Frydenberg have said that no state would be worse off, but they are not prepared to make that guarantee in writing, in the law.

“Now we have just heard the Treasurer of New South Wales, the Liberal Treasurer of New South Wales and the Liberal Treasurer of Tasmania unite with the Labor Treasurers of Victoria and Queensland to say that this is unacceptable, that they are angry about this, that they want this reflected in the law.

“Every single state and territory treasurer — Labor/Liberal, small state/big state, GST net recipient or GST net contributor — they all agreed.”

Ahead of the meeting, Victorian Treasurer Tim Pallas said he believed the government was trying to fix a “political problem” in Western Australia and their plan had “nothing to do with making the distribution of the GST fairer”.

Modelling provided by Mr Pallas’s department suggested falling iron ore prices in Western would combine with the housing downturn in NSW and Victoria to wreak havoc on those states’ budgets.

But Mr Morrison hit back during a press conference yesterday afternoon.

“Premiers and treasurers always want more,” the Prime Minister said.

“Our government is not in the habit of writing blank cheques to anybody. It is my job to ensure that every single state and territory is better off under the plan.”

Mr Morrison said he didn’t need the states’ approval to pass legislation, and signalled he would do so when parliament resumes later this month.

Mr Bowen indicated Labor would support the floor policy, but would first try to pass an amendment guaranteeing no state would be worse off.