Al-anwar Newspaper English news in Australia
Jim Chalmers has promised not to reverse a Morrison-era twist on the Goods and Services Tax despite taxpayers being slugged $10bn over the next two years to top up payments to Western Australia.
A Commonwealth Grants Commission report revealed the estimated cost of the former Coalition government’s GST distribution deal will be $4.4bn this financial year and rise to $5.6bn in the financial year 2024.
Scott Morrison as treasurer cut a deal with WA before the 2019 election to introduce a new “floor” that means every state must receive 70 cents for every dollar of GST they raise in 2022-23 and 75 cents a dollar in 2024-25.
Speaking to journalists in Perth after the CGC report was released on Tuesday, the Treasurer said the cost was a “thank you” to the people of WA and Labor had no plans to change the arrangement.
“This is a deal that we are committed to, this is a deal that we are proud of, this is a deal that ensures that we recognise that the WA economy often keeps the wheels of the national economy turning,” Dr Chalmers said.
“I have said to Premier McGowan and Treasurer McGowan, I’ve said publicly and privately here in WA, we don’t intend to change that deal.”
Premier Mark McGowan — who is also the WA Treasurer — has railed against any suggestion of changing the arrangement despite criticism from other states.
Dr Chalmers on Tuesday dismissed as “absolute rubbish” claims from WA-based Liberal senator Michaelia Cash that Labor was going to tinker with the GST floor.
But he wouldn’t be drawn on whether the “no worse off” guarantee would be allowed to expire in the 2026 financial year, saying that a review into the arrangement was years away. The Morrison government introduced the safety net when it implemented the new GST floor to compensate states with funding from outside of the GST pool for any losses they incurred during the transition to the new system. The floor was introduced to try to stop WA from missing out on GST because of soaring mining royalties 30 cents and to tie it to a benchmark of the fiscally stronger of the less volatile economies of NSW or Victoria.
The arrangement has sparked controversy especially given WA enjoyed a financial boom during the Covid-19 pandemic and is in a strong economic position, with critics arguing it isn’t equitable for the state to be receiving more GST than it needs.However, tax expert Robert Breunig warned Labor wouldn’t want to change the policy because it could cost them votes in WA, which he said was the same reason the Liberals introduced the policy in the first place.
“I think it really demonstrates a wider point about governments,” the director of the Tax and Transfer Policy Institute at The Australian National University said. “If the government starts putting in place programs that are that are not a good idea just to win votes, these programs become almost impossible to undo in the future. Our whole system is full of stuff like that.”
