GST top up just a band aid solution

WA’s latest GST share of 47 cents highlights that top-ups continue to be nothing more than a band-aid solution. Structural reform is the only solution.

CCI has modelled Federal Labor’s $1.6 billion ‘Fair Share for WA Fund’ in the context of the state’s most recent GST share of 47 cents.

The fund is intended to raise WA’s GST to 70 cents.

CCI Chief Economist Rick Newnham said the modelling shows that if Federal Labor’s GST Fund was enacted today at 47 cents, WA would receive its ‘fair share’ for just one year and one day.

“Federal Labor’s ‘Fair Share for WA Fund’ is not a GST solution. West Australians would be forced to go back to Canberra, cap in hand, on the first anniversary of a Labor Federal Government asking for their GST back again,” Newnham says.

“WA has already had three years of top-ups from the Federal Government which hasn’t solved the problem.

“Ruling out a change to the GST formula is ruling out a long-term fix to the GST and the national economy will suffer as a result.

“If Federal Labor wants to resolve this issue once and for all, they should immediately adopt reasonable equalisation, as recommended by CCI and backed by the Productivity Commission’s Draft Report.

“If implemented, this would ensure every Australian citizen continues to have access to the very high standard of the national average of public services, while incentivising states and territories to develop their own industries and grow the national economy.”

CCI has recommended a transition path to implement reasonable equalisation that would ensure no state is worse off over the forward estimates. This would require $5 billion over three years.

“Labor’s $1.6 billion Fund is the amount needed to pay for the first year of transition to a new GST system where no state loses out,” Newnham says.

“If Labor commits to extending its fund to $5 billion, they can fix the GST once and for all while ensuring no state is worse off over the forward estimates.

“The time is now – 2018 must be the year for GST reform.”

As WA’s peak business advocate, CCI works to elevate the concerns of WA industry to key nationwide decision-makers. Find out more about our advocacy efforts here.

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