WA’s GST revenue remains unrealistic and unfair, especially when we know iron ore royalties have fallen and the state has the lowest credit rating in the country, according to CCI.
“In receiving just 30 cents out of every $1 that WA generates, the state is hamstrung to drive growth and development at the rate we could otherwise achieve,” CCI Director of Policy Dale Leggett says.
“The Commonwealth Grants Commission needs to review the use of data that is effectively three years old to ensure the distribution is more realistic,” Leggett says.
“In 2016–17, WA’s entitlement is based on its relative needs in 2012–13, 2013–14 and 2014–15 – in these years iron ore prices were significantly higher.
“We are seeing around $2 billion come to WA compared to more than $14 billion going to Queensland, another resources state.”
Leggett says the CGC’s use of a three-year lag is “grossly unfair” given the large falls in commodity prices over the past 12 months.
“If the state was to receive the GST based on population share (10.9 per cent currently), this would equate to an approximate grant of $6.6 billion in 2016-17,” he says.
“This means we have lost around $4.5 billion (WA getting $2.03 billion 2016-17).”
Leggett says CCI supports Treasurer Mike Nahan’s pledge to continue to promote opportunities for reform of the state’s GST distribution.
In the budget papers, the State Government calls for a reduction in the volatility of WA’s overall revenues.
“This includes ensuring remaining Commonwealth tied grants better align with growth in the State’s spending requirements in key service delivery areas, such as health, education and transport,” the papers state.