Growth protects state’s GST share

TASMANIA’S share of the GST pool has decreased slightly under a new distribution model signed off by Treasurer Josh Frydenberg yesterday.

However, the state’s GST entitlement actually increased by $44 million to more than $2 billion in 2019-2020 thanks to a growth in the overall funds available.

The GST Revenue Sharing Relatives document released by the Commonwealth Grants Commission yesterday afternoon acknowledged Tasmania’s economic position had “strengthened marginally” thanks to above average wage growth, population growth and property sales.

But the state remained second worst on fiscal capacity among all states and territories.

“Tasmania has weak revenue raising capacity, with well below average mining production, taxable payrolls and value of property sales,” the report said.

“In addition, it has the second highest per capita assessed expenses for schools, health, housing and welfare.”

Tasmania’s GST decreased from 3.7 per cent to 3.6 per cent, but its entitlement grew 1.8 per cent, the report said.

This meant Tasmania would receive about $2.5 billion in 2019-20.

Queensland, South Australia and the Northern Territory also received a hit to their share.

Mr Frydenberg last year pledged to ensure no state or territory was left worse off under the new distribution model, which is to come into effect during the 2021-22 financial year.

Conversations between state governments and their federal counterparts became heated towards the end of the year over fears some jurisdictions would lose out under the proposed arrangement.

State Treasurer Peter Gutwein said under the Hodgman Government Tasmania’s economy was one of the fastest growing economies in the nation.

“One of the key reasons why our share has reduced is because our economy is grow- ing and as a state we are financially stronger than we have been for many years,” he said.

“The final outcome won’t be known until the size of the GST pool is determined as part of the Federal budget process and I am confident any impact on Tasmania’s share can be managed within our budget.”

Mr Gutwein said the State Government was committed to keeping the budget in surplus and investing in communities and frontline services.

But Hobart independent MP Andrew Wilkie said the new GST distribution formula remained a “ticking time bomb” for the state.

“That’s exactly what we’re starting to see now,” Mr Wilkie said.

“The Liberal and Labor parties failed to legislate for Tasmania’s GST share to be maintained, which obviously put Tasmania at risk of failing to see GST growth matching increases in national GST receipts.

“That’s why we got less than we should have in this latest GST distribution.”