State’s share of GST takes a hit

TASMANIA’S share of GST payments has been cut by $29 million, putting the state’s Budget surplus under immense pressure.

The Commonwealth Grants Commission 2018 update estimated the state would receive millions less in 2018-19 than expected, which will eat into Tasmania’s $34.6 million surplus — projected after election promises are taken into account — leaving just $5 million for 2018-19.

It shows that the state has plenty to fear from any change to the carve-up formula resulting from a Productivity Commission review due in May.

The commission’s update shows Tasmania’s share of the $65.8 billion national pool will shrink from 3.8 per cent to 3.7 per cent mainly because of an increased share of commonwealth payments, an increase in taxable payrolls and an increased share of mining production.

The latest update estimates that Tasmania will get $2.434 billion in 2018-19 compared with the $2.462 billion estimated in the Department of Treasury and Finance’s revised estimates report in January.

Leading economist Saul Eslake said the update illustrated the Budget was much more vulnerable to any shocks because of the election spending the Liberals had committed to.

“What this Grants Commission update highlights is that there is no fat in the Budget now to withstand a big change in the formula, if that is what the Productivity Commission does,” he said.

“We are able to absorb it at the moment but we couldn’t do it for another year.

“The Budget may be helped by increased receipts from stamp duty because of the real estate boom and boosted payroll tax from increased employment and increased dividends from GBEs.”

Treasurer Peter Gutwein said the announcement came as no surprise.

“Tasmania’s GST relativity reflects strong economic growth in Tasmania and as a consequence, our share of GST has reduced. One of the key reasons why our share has reduced is because our economy is growing and as a state we are financially stronger than we have been for many years,” he said.

He said he was confident the impact could be managed and the Government was committed to keeping the Budget in surplus.

Labor Treasury spokesman Scott Bacon said the downgrade would place pressure on the Budget which was already under stress after what he says was more than $2.7 billion in Liberal election promises.

The Liberals say their election promises over the forward estimates were $335 million in recurrent spending and $320 million in infrastructure spending.

Federal Treasurer Scott Morrison said an increased GST pool meant increases for several states over last year: NSW ($519 million), Victoria ($1.8 billion), Western Australia ($1 billion), South Australia ($467 million), ACT ($54 million) and Tasmania ($56 million).

Queensland (down $401 million) and Northern Territory (down $136 million) receive less than last year.

He said the Commonwealth would consult with states in the wake of the Productivity Commission review.

Franklin MP Julie Collins said the Turnbull Government needed to assure Tasmanians that the state’s future fair share of the GST was safe.

Tasmania’s share varies according to the state’s share of the national population, the size of the GST revenue pool and Tasmania’s relativity factor.

The State Government’s Revised Estimates Report released in January stated that under one formula Tasmania’s share could fall by $639 million by 2020-21.