Troy Buswell to demand a bigger share of GST for WA

as posted here

TREASURER Troy Buswell says WA has been cheated on its share of the GST and will demand a bigger cut for the state at a showdown in Canberra today.

The heads of state treasury departments are preparing for a confrontation on the division of GST revenues today, with resource states WA and Queensland claiming the tax should be used to help build their infrastructure.

Changes to the formula for distributing GST that have been proposed by the Commonwealth Grants Commission have been the subject of heated debate among the states.

The commission has accepted arguments from Queensland, Western Australia and the Northern Territory that their rapidly growing populations are putting strains on infrastructure for which they need compensation.

Queensland argued that over the past decade, its population had grown by 22.5 per cent, compared with 10 per cent in New South Wales and 12.6 per cent in Victoria. This meant it had to spend more on transport, water, power, schools, hospitals, police stations and prisons.

NSW, Victoria, Tasmania and the ACT argued that the fair division of GST required only that it should enable all states to deliver equivalent quality services on an annual basis.

But the commission accepted the argument of the resource states in its draft recommendation. It said the division of grants was not just about the annual budget bottom line, but about the financial net worth of states.

A joint statement by Mr Buswell and Queensland Treasurer Andrew Fraser said they were being cheated by the existing formula.

"Queensland and Western Australia were Australia’s economic engine rooms leading into the global recession, and we are best-placed to lead the nation out of it," they said.

"Both have outpaced the national rate of economic growth over the last dozen years, and both have had lower unemployment rates than the national average.

"However, Queensland and Western Australia are both donor States.

"On a per capita basis, Queensland and Western Australia will both receive a GST allocation well below the average per capita GST distribution.

"And despite the protests of the southern States, Queensland and Western Australia will both receive a lower GST per capita than both NSW and Victoria.

"Presently Western Australia receives around $910million less than its per capita share while Queensland misses out on $700million.

"The current formula recognises the provision of services - but common sense would suggest that the provision of services requires not just people, but buildings and other infrastructure too."

WA and Queensland receive lower GST per capita because their resource richness gives those states greater taxing power than other states, for which they are penalised by the commission.

However, NSW and Victoria have argued that the commission's proposed changes would greatly damage their ability to provide services


as posted here