GST still at the heart of our budgetary ills, says Newnham
While huge infrastructure spending will give the WA economy a good shot in the arm it shouldn’t detract from the need to reform the GST distribution system, says CCI Chief Economist Rick Newnham.
The Federal Budget outlines a $1.6b infrastructure commitment that will go toward road and rail projects as well as a $226m GST top up payment that will keep our GST share at 2014-15 levels.
The Perth Freight Link is not entirely dead either, with the Federal Government committing future funding to any future WA Government which proceeds with the project.
Newnham welcomes the spending and top-up payment but says problems with the way GST is distributed remain.
“The headline for WA is the $1.6b infrastructure spend commitment. This is great for WA business because it will increase productivity and reduce costs but there will also be opportunities for local businesses to win work and create jobs for West Australians,” he says.
“We strongly welcome the GST top-up but it highlights that the GST system is not working the way it was intended to work and WA business calls on the Federal Government to reform it to incentivise national growth.”
Newnham says while the forecast budget surplus in 2020-21 is welcomed, future budgets should avoid reaching this by increasing taxes.
“It’s important the Federal Budget, like the State Budget, drives towards a surplus,” he says.
“We are concerned however that a lot of the measures to return to surplus have been through increased taxes rather than reduction in spending and any future budget measures should focus on reduction in spending.”
Newnham also welcomes the $300m red tape reduction package, which will incentivise States to reduce their business red tape through a National Partnership on Regulatory Reform.
“The Federal Government has had a lot of measures itself to reduce red tape but small business continues to report that States are the major contributors to red tape,” he says.
“Red tape is still a significant issue for small business profitability and hinders creation of new jobs.”