Western Australia has been pushing for a Productivity Commission inquiry into the GST distribution system, which positions WA as the only state to receive less than 70 cents — and eventually 30 cents — per person per dollar of GST in distributions.
The volatility to the current Horizontal Fiscal Equalisation (HFE) distribution system was instigated by the mining boom, which saw WA receiving less than smaller jurisdictions such as the Northern Territory, Tasmania and South Australia.
WA Premier Mark McGowan said, “One of the first things my government did when it came to office was begin the process of calling for a Productivity Commission review into the GST system.”
The Federal Government, in response to the Productivity Commission’s final report into the GST system, has decided to equalise the HFE to the fiscal capacity of the strongest state out of New South Wales and Victoria, thereby removing the volatility in how the funds are distributed.
Treasurer Ben Wyatt added, “Now it’s not just Western Australians calling for reform — we have an independent and respected body providing a credible, clear path forward on fixing the GST system.”
WA will also receive short-term funding over the three years from 2019–20 to 2021–22, as part of the government’s attempt to ensure that no state receives less than 70 cents per person per dollar of GST.
The fund will be spent as each state government sees fit, either to deliver services to schools, hospitals or infrastructure. During this time WA is expected to be the only state with a relativity below 0.70. A permanent 70 per cent floor will then be established in 2022–23, rising to 75 per cent in 2024–25.