Labor to back big GST top-up — on terms

LABOR will back the Turnbull Government’s $7.2 billion cash injection into the GST pool, but is calling for a guarantee that the money is not taken out of existing funding for the states.

Opposition treasury spokesman Chris Bowen said Labor was responding “constructively” to the government’s changes to how the GST is carved up, but was entitled to be cynical.

Mr Bowen stopped short of committing to support all of the Government’s changes after being repeatedly asked whether Labor backed the level of extra funding.

He said state governments needed a guarantee that the extra cash injection — which would hand Victoria an extra $425 million over a decade — would not be clawed back through other funding which goes to the states and territories.

“The major point of disagreement is that we’re concerned that the money could be clawed back through other means,” Mr Bowen said.

”Premiers and chief ministers would be very entitled to be sceptical and wanting as strong a guarantee as humanly possible.”

The changes would see the tax carve-up no longer tied to the best performing state, which recently has been Western Australia resulting in its share in the dollar falling.

Instead the best performing of the two biggest states — Victoria or NSW — will be the benchmark, while the government will pour up to $1 billion a year to grow the GST “pie”.

There will also be a floor to ensure no state receives less than 70 per cent of their own GST revenue, from 2022-23, which will rise to 75 cents per person, per dollar of GST, from 2024-25.