Federal Labor should agree to full GST proposal or risk short-changing states

If Federal Opposition Leader Bill Shorten doesn’t commit to the Federal Government’s full GST reform package every state will be relatively worse off, including WA which will miss out on $1.7 billion, according to Chamber of Commerce and Industry WA (CCI) modelling.

The Federal Government’s proposed plan transcends the zero-sum game of GST reform, ensuring that every state and territory receives a greater amount of GST while structurally improving the system.

There are three key elements – a progressive 70 cent to 75 cent floor, changing the broken GST distribution formula and injecting extra cash into the GST pie.

CCI welcomes Bill Shorten committing to one-third of this package – matching the proposed GST floor. However, by failing to commit to changing the GST formula or to injecting additional funds into the GST pool, the Labor Party’s commitment is incomplete and will leave every state relatively worse off.

CCI modelling reveals that by only committing to a GST floor, not the full reform package, the Federal Opposition will leave WA $1.7 billion worse off, while NSW will lose $351 million, Victoria $425 million and Queensland $518 million, relative to the Federal Government’s proposal. Recipient states will also lose large amounts – South Australia $257 million, Tasmania $112 million and the Northern Territory $258 million.

The total cost of the GST floor committed to by Bill Shorten over the next eight years is just under $3 billion. Federal Labor either needs to commit to the Government’s full reform package or explain to the states and territories that a floor will only benefit WA.

Now is the time for bi-partisan support for GST reform in the national interest of every Australian. It is no longer appropriate to keep options open and leave the issue in limbo.

According to exclusive national polling of 2,350 Australians commissioned by CCI, 70 per cent of Australians believe that WA’s GST share fell to an unacceptable level – below 35 cents – and most Australians (52%) believe that if it is in the national interest to change the GST distribution it should be changed.

Fixing the GST is the most important issue to West Australians, second only to cost of living and 68 per cent of West Australians believe the GST distribution should focus on the national interest instead of a political fight between the states and territories.

CCI urges Opposition Leader Bill Shorten to show bi-partisanship and support the Government’s full GST reform package in the national interest. We also urge each state Premier to support the reforms in full so that the GST distribution can finally be fixed to benefit every Australian.

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