Morrison’s plan fixes ‘bung’ GST system

CCIWA has welcomed the Federal Government’s landmark proposal for GST reform in the national interest.

Federal Treasurer Scott Morrison announced the reforms this morning with a transition package beginning from 2019-20, which would see WA better off by $4.7 billion over eight years.

It would mean WA’s share would never fall below an equivalent 70c in the dollar contribution again and would hit a 75-cent return towards the end of the transition.

The Federal Government will kick in $7b to state and territory governments as part of the reform.

CCI Chief Economist Rick Newnham said if adopted, the reform would ensure every state and territory received a greater amount of GST in a structurally improved system.

“CCI’s principles for any proposed change to the GST system are that it must be fair for all states, it must be pro-growth and it must be durable over the long-term. This proposal ticks all three boxes,” he said.

“These reforms ensure that no state is left behind but every state can do more to get ahead. The GST floor will ensure that states which forge ahead to develop their own economy are not punished with less GST as a result of their success.”

If adopted, Newnham said the reform would be one of the most significant policy achievements in CCI’s 130-year history.

“CCI’s focus on national interest has transformed the debate from ‘poor WA’ to one that ensures every Australian stands to benefit, which has carried this reform over the line,” he said.

Morrison told Sky news that it was clear the system was broken because WA was getting, at times, less than 30c in the dollar for its share.

“They are actually getting less in dollar terms than the Northern Territory or Tasmania. That just doesn’t add up and it has to be fixed,” he said.

“What it says to WA, under the current formula, the minute you put the shovel in the ground you get penalised.

“The mining minerals boom in WA made the whole GST system go bung. It was no one’s fault, it was just the formula was not built to cope with something like that happening… the new change will ensure states won’t fall below 75c in the future.”

Morrison said the Federal Government could push ahead with the plan without the states agreeing to it, but did not believe that was the right way forward.

“By the end of the year I would like to get the agreement of all states or territories of going forward on this basis.”

He confirmed there were no plans to raise the rate of GST: “My job at the moment is to get taxes down.”

WA Treasurer Ben Wyatt told Channel 9 News he was surprised at how good the deal was for WA and was happy with the 70c-75c share, which he said was fair.

He said there was no reason for any state to oppose the proposal because it meant a slight increase in GST return for every state. He expected to meet with treasurers of all other states and territories in August.

Wyatt hoped the proposal would reach bipartisan agreement and be adopted by both parties.

► Hear from Treasurer Scott Morrison at the CCI Breakfast with the Treasurer on July 16 at the Hyatt Regency. 

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