Business welcomes WA Gov’t GST call

29 June, 2017

The Western Australian business community has welcomed the McGowan Government’s call for GST reform to improve incentives for national economic growth.

The Chamber of Commerce and Industry of Western Australia (CCI) says the State Government’s submission to the Productivity Commission, made today, makes important recommendations for GST reform that would both improve WA’s GST share and boost development of under-utilised industries nationwide.

CCI’s Productivity Commission submission has called for the GST system to be reformed to a partial equalisation model that would restore incentives for states to develop under-utilised industries and boost national economic growth. CCI also called for the introduction of a relativity floor for all states, to create stability in GST revenue.

CCI Chief Economist Rick Newnham said the State Government’s submission highlighted how the current GST distribution system has created perverse incentives for state governments across the country to block industry development, which hinders growth of the national economy.

“The Chamber of Commerce and Industry WA and the business community welcome the State Government’s package of reform options that aim to ensure both WA and the nation benefit from reform of the broken GST system,” Mr Newnham said.

“CCI particularly welcomes the proposal to carve out a portion of mining royalties, or a proportion of all revenue – CCI has also called for such a partial equalisation approach, as this will drive states and territories to develop under-utilised resources industries to make up for the GST shortfall, while also returning more GST to WA’s coffers.

“Under the current GST model, WA will lose more than $11 billion over the next three years compared to its equal per capita share – that’s the equivalent of nine new Perth Children’s Hospitals or seven new Perth Stadiums.

“CCI welcomes the State Government’s submission to the Productivity Commission and its focus on GST reform in the interest of national economic growth – CCI is pleased that Team WA is all on the same page with this shared objective and WA business looks forward to continuing to work with the State Government and all our state’s political leaders to stress the importance of GST reform for the future of the country.”

CCI has also welcomed Treasurer Scott Morrison’s warning to states and territories that GST funding could be cut if governments insisted on limiting gas exploration.

“If a State makes a policy decision to prevent development of a resources sector, the GST system ignores this decision and the potential revenue it could bring, and concludes the state must need more GST – this is effectively rewarding economic laziness and punishing states like WA that drive development, grow their industries and create jobs,” Mr Newnham said.

“New South Wales and Victoria have both banned the development of onshore gas, but because these bans are policy decisions, the GST system decides that these states don’t have enough cash to deliver services at the leading state’s level – this year NSW received $17.2 billion and Victoria got $13.6 billion in GST, while WA got a woeful $1.9 billion.

“CCI looks forward to hosting Treasurer Scott Morrison for a business breakfast tomorrow and continuing to discuss GST reform with all political leaders at a state and federal level.”

Media contact: Kate Hodges – 0448 928 227