Federal Treasurer Scott Morrison paid tribute to CCIWA for its ‘leadership and partnership’ in working with the Commonwealth to find a national solution to the problem of GST distribution.
Morrison was in Perth for the sell-out Breakfast with the Treasurer event hosted by CCI to discuss the proposed reforms to GST announced last week, which would see WA $4.7 billion better off than under the current system.
CCI has been leading the charge to advocate for GST reform. It’s focus on the national interest to ensure every Australian stood to benefit from reform rather than the ‘poor WA’ argument changed the national debate.
Morrison the reforms would encourage all states to grow their economies, as WA had done, and anyone who thought the plan did not equate to major policy change had missed the point.
“The biggest policy bias that exists under the current formula is that it penalises states that choose to exploit and develop their resources, as WA has done…that will no longer be the case,” the Treasurer told more than 230 business leaders.
“WA has about 10 per cent of the population and 14 per cent of the economy and that’s on the other side of the mining boom.
“We want our states and territories to do what WA has done. One of the big problems I had with this formula is that it was penalising WA for doing exactly the thing we wanted all the other states and territories to do.”
Morrison said despite all the talk about the tax’s distribution, it was the strength of the entire economy that mattered even more.
“If we had a consumption growing at 1 per cent less in one year that would cost the GST pool over a decade $7 billion. This package is about that entire amount,” he said.
“Just imagine if that didn’t happen one year, but more than one year, then you are into the tens of billions.
“For all the talk about how it’s distributed, let’s not lose sight of the more important thing and that is how big is the pie. You don’t get a bigger pie if you wop on $200 billion of higher taxes over the next 10 years.
“You don’t get a bigger pie unless you engage in things that see industry invest, as we’ve seen it occur in this country – non-mining investment up 10 per cent five times the long run average, eight consecutive quarters, the longest run in 20 years.”
Polling commissioned by CCI revealed that 78 per cent of West Australians believed a change to GST should ensure no state or territory would be left behind and every state and territory would be encouraged to get ahead.
Morrison also said he was confident the Federal Government’s company tax legislation – which would reduce the tax rate for companies with turnover or more than $50m from 30 per cent to 25 per cent over 10 years – would pass through the senate at the next sitting, despite seeing ‘plenty of hurdles’ to get it through.