GST carve-up: Winners and losers announced by Scott Morrison

Scott Morrison hails a 5pc increase in the GST pool as the product of ‘integrity measures’. But not everyone’s happy.

Federal Treasurer Scott Morrison. Picture: Hollie Adams/The Australian

Treasurer Scott Morrison has hailed a more than 5 per cent increase in the GST pool as the product of integrity measures introduced by the government, while pledging to revise the funding formula ahead of the next election.

Victoria and Western Australia received big boosts in the Commonwealth Grants Commission’s $65.8bn GST carve-up, announced by Mr Morrison this afternoon, with Queensland losing out.

But pressure remains for WA to get a greater share, after it received only 4.9 per cent of the carve-up, despite having 10.9 per cent of the Australian population.

The Productivity Commission is reviewing the GST funding formula and is due to report on its findings in May.

Mr Morrison said the commission’s findings would not necessarily be adopted as government policy.

“The government will still, I’m sure, have a lot of work to do consulting with the states about the direction that the commonwealth may take with the states in terms of where we go to with the GST formula,” he said.

Mr Morrison said $1.8bn of the $3.4bn increase in the GST pool, up from $62bn last year, was the direct result of integrity measures introduced by the government to improve the GST take.

“That is including everything on the GST on digital services, it includes tightening up on the black economy to ensure the GST is being paid by those who have been seeking to avoid tax,” Mr Morrison said.

“This has significantly expanded the pool of resources for the states, for hospitals, for schools, for police forces, for roads, for all of these sorts of things.”

The increased pool has resulted in a $519 million boost for NSW, an extra $1.2bn for Victoria, a $401m reduction for Queensland, a $1bn boost for WA, a $467m increase for SA, an extra $56m for Tasmania, an extra $54m for the ACT, and a $136m reduction for the Northern Territory.

Victoria’s share will increase from 93 cents to 99 cents, while Western Australia’s share will rise from 34 cents in the dollar to 47 cents.

South Australia also got a more marginal boost, from $1.44 to $1.48.

Queensland is the biggest loser, down from $1.19 to $1.10, while NSW is down from 88 cents to 86 cents.

The Northern Territory’s share has fallen from $4.60 to $4.26, Tasmania has fallen from $1.80 to $1.77, while the ACT had a negligible change, from $1.19 to $1.18.

The carve-up works out to a 27.4 per cent share for New South Wales, 25.6 per cent for Victoria, 22.2 per cent for Queensland, 10.3 per cent for South Australia, 4.9 per cent for Western Australia, 4.2 per cent for the Northern Territory, 3.7 per cent for Tasmania and 2.0 per cent for the ACT.

NSW is home to 31.9 per cent of the Australian population, Victoria 25.5 per cent, Queensland 20.3 per cent, South Australia 7.1 per cent, Western Australia 10.9 per cent, the Northern Territory 1.0 per cent, Tasmania 2.2 per cent, and the ACT 1.7 per cent.

Mr Morrison said he had discussed his concerns with the Northern Territory Treasurer about the territory’s fiscal challenges.

“Those discussions have been underway now for some while, whether it’s in trying to address the issues in remote communities in the Northern Territory, but also the revenue base

of the Northern Territory, as you know, they have some significant decisions to make in relation to resources and gas in the Northern Territory as well as other revenue issues.”

Mr Morrison said population growth had been a key reason for Victoria’s funding boost.

He said the government would continue to engage with Western Australia about making the system fairer for them.

“I know that Western Australians just do not want Band-Aids,” he said. “They ultimately want to see this issue addressed thoroughly.”

Queensland concerned about Productivity Commission review

Queensland Treasurer Jackie Trad said her state respected that today’s carve-up was the decision of the independent Commonwealth Grants Commission.

“Sometimes Queensland gets an increase in GST and sometimes we are a donor state to other states in the Commonwealth, but what I am more concerned about is the Turnbull government’s desire to change the rules, particularly through the Productivity Commission review around GST distribution,” Ms Trad said.

“That could see Queensland $1.6bn worse off every single year, and that essentially dwarfs the $400 million decrease in this year’s GST allocation.”

Turnbull’s ‘Hunger Games’ for the states

Labor leader Bill Shorten said Western Australia would be better off under Labor.

“Yet again Mr Turnbull seems incapable of recognising Western Australia’s legitimate complaint that they’ve been missing out on support from the federal government,” Mr Shorten said.

“I notice that Queensland and New South Wales have gone backwards under the current carve-up. Victoria and WA have gone forward.

“The challenge though for WA is this: they’ve been hard hit by the mining boom. When things were going well they were generating a lot of income for the nation, but under the formula used for the carve-up for the tax, for the GST, they’ve had a very low proportion.

“So for every dollar they send over to the east, they’re getting a smaller proportion back.

“Now Labor says rather than pit NSW and Queensland against WA, there is a better way, and the way we can do that is we want to put more funding into infrastructure in the West.

“We’ve announced upgrades of hospitals. We’ve announced new highways and roads. We can do that because we’re not going to give $65bn away to the top end of town.

“Mr Turnbull wants the various states and regions of Australia to engage in a Hunger Games, while he is handing away a truckload of cash from the budget to the top end of town.”

Labor treasury spokesman Chris Bowen said the Abbott and Turnbull governments had done “nothing but talk” about concerns around the GST distribution formula.

“Today’s announcement by the Commonwealth Grants Commission is the normal functioning of the current GST distribution system, not a policy decision from the commonwealth government to do anything substantive about Western Australia’s legitimate concerns about GST relativities,” Mr Bowen said.

“Scott Morrison has completely mishandled this issue from the very start.

“Firstly, Mr Morrison refused to consider or adopt Labor’s $1.6 billion Fair Share for WA Fund that would have seen commonwealth funding for Western Australia brought up to the equivalent of a 70 cent floor, without ripping billions of dollars of GST revenue from other states and the territories, preferring instead to kick-off another review into the GST distribution formula.

“Then Mr Morrison came charging out of the blocks in support of the Productivity Commission’s draft recommendations which would see South Australia lose $256 million and Tasmania lose $77 million in GST revenue.

“Then after the understandable push back from Federal Labor and state and territory governments, Mr Morrison announced in early January — as Australians were enjoying the summer break — that the Productivity Commission would not provide its final report on GST distribution reform until after the May Budget.

“All Scott Morrison has is talk and delay adding to the chaos and uncertainty of the Turnbull government’s position on GST distribution,” Mr Bowen said.

With AAP

GST carve-up at a glance

NEW SOUTH WALES

* Total revenue up $519 million

* Share: 86 cents in the dollar, down from 88 cents, because of NSW’s ability to raise its own revenue

VICTORIA

* Total revenue up $1.8 billion

* Share: 99 cents, up from 93 cents due to a fall in its other commonwealth payments and an increase in demand for services due to population growth

QUEENSLAND

* Total revenue down $401 million

* Share: $1.19, down to $1.10 because its earlier natural disaster spending needs have largely passed

WESTERN AUSTRALIA

* Total revenue up $1 billion

* Share: 47 cents, up from 34 cents because of falling revenues from mining, property and payrolls

SOUTH AUSTRALIA

* Total revenue up $467 million

* Share: $1.48, up from $1.44 due to slow growth in its tax base

TASMANIA

* Total revenue up $56 million

* Share: $1.77, down from $1.80 because of extra commonwealth payments and tax revenues

ACT

* Total revenue up $54 million

* Share: $1.18, down from $1.19 because of higher revenue from property and payrolls

NORTHERN TERRITORY

* Total revenue down $136 million

* Share: $4.26, down from $4.60 because of higher commonwealth payments and a fall in service delivery costs

Source: Commonwealth Grants Commission/AAP