Tassie weighs up threat of GST grab as Federal Government prepares to release GST review

TASMANIA’S $2.4 billion slice of the GST pie is under threat as the Federal Government this week considers a review into the way money is allocated between states and territories.

Julie Collins says any change to the GST carve-up represents one of the biggest threats to Tasmania’s future prosperity in a generation. Picture: MATHEW FARRELL

TASMANIA’S $2.4 billion slice of the GST pie is under threat as the Federal Government this week considers a review into the way money is allocated between states and territories.

Any potential changes to the formula of the GST carve-up, to be outlined in a report by the Productivity Commission, represents one of the biggest threats to Tasmania’s future prosperity in a generation, federal Labor MP Julie Collins says. And independent MP Andrew Wilkie warns the Turnbull Government could attempt to shore up its election chances in Queensland and Western Australia by offering GST sweeteners — at Tasmania’s expense.

“It will be a shocking betrayal of the state and must be resisted at every turn,” the member for the Hobart seat of Denison yesterday told the Sunday Tasmanian.

The warning of a GST grab comes as Federal Cabinet is tomorrow expected to release the Productivity Commission review into the formula that determines the GST distribution.

Tasmania receives 40 per cent of its revenue, or about $2.4 billion a year, from the national GST pool.

Senior Tasmanian Liberal senator Eric Abetz dismissed talk of GST losses for the island state as scaremongering.

“The Prime Minister has made it clear that Tasmania will not lose out from any GST reform,” he said.

“The only party saying one thing in Perth, and another thing in Hobart, is Labor whereas the Government is working to ensure a fair system for all without in any way harming Tasmania.

“The Tasmanian Liberal Senate team are in complete lockstep with the Premier in standing up for Tasmania.”

Andrew Wilkie warns the Turnbull Government could attempt to shore up its election chances in Queensland and Western Australia by offering GST sweeteners — at Tasmania’s expense. Picture: AAP Image/Alex Murray

Prominent economist Saul Eslake said Tasmania’s share of GST was vulnerable because of the Coalition Government’s desire to retain Western Australian seats at the next election.

“The Liberals hold 11 out of 15 seats in WA where GST share is a major issue, whereas they have little to lose in Tasmania with no Federal members at the moment,” he said.

Leading Coalition ministers have strongly indicated that medium to long-term changes are afoot.

Finance Minister Mathias Cormann, a West Australian, said the Government recognised that GST sharing arrangements were unfair on WA.

Treasurer Scott Morrison has said there is enormous sympathy in Australia for WA’s poor GST share.

He said the next election was a “clear black marker” on the issue and that it would be resolved before then.

“I, and the Government, remain very committed to doing what we said we would do and that is to fix it, to fix the GST,” he said last month.

Treasurer Peter Gutwein said on Budget day that he had spoken to Mr Morrison and had formed a view that “our revenue base is secure”.

But just a few days later Premier Will Hodgman told the Federal Liberal Council: “Tasmania deserves its fair share of GST and we will fight any government from anywhere that threatens that.”

Franklin federal Labor MP Ms Collins said the fact the Treasurer had asked for a transition plan should worry all Tasmanians.

“Transition plans or top-up payments would put our state at the mercy of future governments’ political whims,” she said.

Liberal senator Eric Abetz dismissed talk of GST losses for the island state as scaremongering. Picture: AAP Image/Mick Tsikas

Mr Wilkie said Tasmania had a higher reliance on GST revenue than other states because of the relatively small tax base, social disadvantage and dislocation from the mainland.

“If the Government hangs Tasmania out to dry in order to shore up election chances in states like Queensland and Western Australia, it will be a shocking betrayal of the state and must be resisted at every turn,” he said.

Mr Eslake said an absolute guarantee that Tasmania would not receive a cent less of GST as a result of the review was disingenuous.

“All the Prime Minister is ‘guaranteeing’ is that the dollar amount of GST revenue, which Tasmania will receive in future years, will not fall below the dollar amount it will receive in 2018-19,” he said.

“The most recent Federal Budget predicts that total revenue from the GST will rise by almost 15 per cent between the 2018-19 and 2021-22 financial years.

“Mr Turnbull’s ‘guarantee’ implies that Tasmania’s share of the GST pie would fall from 3.7 per cent to 3.2 per cent over that period.

“That would mean Tasmania getting $367 million or 13 per cent less in 2021-22 than it would if its share remained at 3.7 per cent.”

Mr Wilkie said changes to the formula could see Tasmania’s share shrink as the GST pot gets bigger.

“I was horrified that when I challenged the PM on this in Question Time last month, he was dismissive of Tasmania’s concern that the issue is the formula and that it must not be changed to our disadvantage,” he said.

Ms Collins said an additional worry was that when Cabinet discussed the GST formula there would not even be a Tasmanian in the room.

Mr Eslake said the fact that Cabinet contained a number of Western Australian ministers including Julie Bishop, Christian Porter, Michael Keenan, Ken Wyatt, Mathias Cormann and Michaelia Cash was a concern.

He said it was well established that the federal Treasurer could instruct on the carve-up of funds.