GST poser remains for Tasmanian budget

ANALYSIS: The biggest question surrounding Tasmania’s fiscal future wasn’t answered in last night’s budget.

Prime Minister Malcolm Turnbull and Premier Will Hodgman in Launceston. Federal-state relations may be placed under strain by the current GST review.

THE 2018-19 Federal Budget did not contain the traditionally comforting GST entitlements for Tasmania across the four years of the forward estimates.

Instead, in its bureaucratic way, the Budget explained why.

“The Government has tasked the Productivity Commission with conducting an inquiry into the impacts of the current system on national productivity, efficiency and economic growth.”

The Productivity Commission will report to the Government by 15 May 2018.

It desperately understates the importance of the review to Tasmania which gets about 40 per cent of its revenue from the GST.

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Last year the Budget papers revealed an increase in Tasmania’s entitlements from $2.38 billion in 2017-18 to $2.65 billion by 2020-21.

But this year’s Budget revealed only a slightly increased $2.41 billion in 2017-18 and $2.48 billion in 2018-19.

There is however some good news contained in the growth of the overall GST pool from $63 billion this year to $77 billion by 2021-22 which should mean Tasmania does not go too far backwards unless there is a big change to the carve-up formula.

Treasurer Scott Morrison has already made positive noises to Western Australia which is reportedly politically consumed by its low per capita share.

With the Coalition having a number of seats in Perth at risk, including that of Attorney-General Christian Porter, and Labor keen to win them, it is a strong possibility that politics could intervene.

The Budget papers show that Western Australia will receive $3.3 billion in 2018-19 compared with the $2.4 billion for 2018-19 predicted in last year’s Budget..

The Coalition has said it will consider a relativity floor below which no state could fall.

The Productivity Commission’s draft report in October revealed Tasmania could lose hundreds of millions of dollars a year under a changed formula.