GST carve-up under fire

FRESH doubts have been raised about the way GST is split among states after the Federal Government body tasked with dividing the $55 billion cash stream suggested the split could be calculated more accurately.

In April, Treasurer Scott Morrison ordered the Productivity Commission to review how the money was divided after pressure from West Australia and New South Wales.

WA receives 34 cents for every dollar it raises in GST revenue, and is demanding a higher share. South Australia and Tasmania are against change arguing they could force less-wealthy states and those with older populations to raise taxes in order to maintain services.

Amid heated debate, the Commonwealth Grants Commission has quietly begun ask ing for consultants to review whether its systems are “the best way of meeting [its] data repository, calculation, analysis and reporting requirements”.

Tender documents seen by News Corp show a number of risks including whether “conceptual methods may be flawed”, “data might be of bad quality and/or not fit for purpose” and data not being “accurate, complete, consistent or reliable”.

“The consultancy should focus on the appropriateness, efficiency and efficacy of the current processes,” the request, for a draft report, to be delivered by November, reads.

The commission told News Corp it “acknowledged that, despite the diligent use of [quality assurance] processes, it could not guarantee 100 per cent accuracy in outcomes”.

“Through the consultancy, commission staff are seeking ways of improving our processes in the interests of continuous improvement,” a spokeswoman said.

The commission is responsible for recommending how GST money collected by the Federal Government is split after taking into account different needs of the states such as how remote some of its population live and the strength of state budgets.

NSW Treasurer Dominic Perrottet is pushing for a change to a per-capita model, which could mean billions of dollars more for the state, describing the current arrangements as “a safety net for the lazy states”.

“Why should NSW taxpayers have to foot the bill for governments who aren’t bold enough to embark on reform,” he said earlier this year.

Tender documents for the review show consultants would need to consider how to assess each state’s financial strength.