State gears up for GST showdown with Federal Government

TREASURER Peter Gutwein will enlist the support of the state’s Liberal senators as GST carve-up modelling shows Tasmania could cop a loss of $248 million.

TREASURER Peter Gutwein will enlist the support of the state’s Liberal senators to ensure Tasmania is no worse off under changes to the GST carve-up as modelling shows Tasmania could cop a loss of $248 million by 2026-27.

State treasurers yesterday demanded guarantees from their federal counterpart Josh Frydenberg that the deal be given “real teeth”.

A slide show presented by the treasurers to Mr Frydenberg on Tuesday night shows how collectively NSW, Victoria, Queensland, SA, Tasmania and the ACT could be ­between $9 billion and $14.7 billion worse off by 2026 under the GST shake-up. Tasmania would face a loss of $248 million in a worst-case scenario.

NSW Treasurer Dominic Perrottet said the Government’s claim no state will be worse off under their new carve-up of the GST did not account for property prices weakening in NSW or the mining sector picking up again in Western Australia — at which point WA would not have to share the benefits with the other states.

“If the Commonwealth were fair dinkum about no state being worse off, they would have no problem enshrining that in law and protecting the states,” he said.

Mr Gutwein wants Federal Government legislation to contain a guarantee that no state will be worse off under any circumstances.

“The state of Tasmania very strongly supports the position that … we … require, a guarantee to be introduced as part of the legislation for the significant changes proposed,” he said after a meeting of state treasurers and Federal Government in Melbourne.

Federal Treasurer Josh Frydenberg. Picture: AAP

State Treasurer Peter Gutwein. Picture: NIKKI DAVIS-JONES

The new deal — which will increase revenue to all states and territories — is set to pass Federal Parliament this month.

Under the proposal, states will receive an eight-year $7 billion transition package to boost their coffers while they adjust to the changes.

“It would be surprising if the Commonwealth could pass the legislation without amendment given the strength of the position adopted by state and territory treasurers. We will be engaging with Tasmanian senators to ensure that a ‘no worse off’ guarantee is included in the legislation,” Mr Gutwein said.

He clashed with then federal-treasurer Scott Morrison on the issue in July.

A showdown now looms with Mr Frydenberg who signalled his determination to legislate the change through Federal Parliament.

Mr Frydenberg said the states would benefit from the Coalition Government’s extension of the GST to online purchases and enhanced compliance activities that will see them benefit by $6.5 billion over the forward estimates. He rejected the states’ call for a guarantee saying that all states and territories would be better off under the $9 billion top up to the GST pool.

“What the states want is for us to run a parallel scheme, the old system and the new system, and we don’t want to run a separate set of books,” he said.

But Mr Gutwein said there were circumstances where the state could be worse off. “The Commonwealth’s modelling indicates that at face value Tasmania would be better off.”

He said if WA’s mining revenues increased or if Queensland became the second strongest state, Tasmania could be left worse off.