GST debt spiral fears

Labor blames Gutwein for ‘dud’ deal over tax

THE “dud” GST deal struck by Peter Gutwein would hasten Tasmania’s spiral into unsustainable debt, Labor says.

Opposition finance spokesman Dean Winter said Treasury projections that Tasmania faced a $750m shortfall over the next decade painted a grim picture for future budgets.

The reduction in revenues made deficits and increasing debt certainties, Mr Winter said.

“We already know that Peter Gutwein is borrowing $2m a day for the next four years because his budget is in significant deficit, because he’s running a very large debt,” he said.

“We will, in fact, have the largest debt Tasmania’s had ever by the end of the forward estimates – and up to $30bn by 2035.

“At the same time, we’re talking about losing significant share of GST revenue, so this is a huge issue.”

Mr Winter said the dilemma was the result of a deal done to boost GST revenues with Western Australia without leaving other states worse off.

In the short-term, the deal worked to Tasmania’s benefit but the latest modelling estimates that after the federal government's “no state worse off” promise expires in 2026-27, Tasmania could be up to $755m poorer and WA could be up to $57.5bn in the black.

But Mr Winter said the result was the fault of but one man.

“This is Peter Gutwein’s deal. In 2018, Peter Gutwein told us that we will be $112m better off under the deal that he struck with the Australian government,” he said.

“And what’s happened since then? It’s has all been laid out by Treasury and it says that we are going to be significantly worse off, Tasmania is going to be hundreds of millions of dollars worse off because of the deal that Peter Gutwein struck.”

Mr Gutwein, who is Premier and Treasurer, said his government would fight to ensure Tasmania received its fair share of GST revenues.

“While Dean Winter might try and rewrite history to suit the Labor Party, I have been very clear from day one that while we welcome the guarantee that is in place until 2026-27, the changed GST distribution model, which federal Labor also supported, is not in our long-term best interests once the guarantee expires and provides Western Australia with a greater share, at the expense of other jurisdictions like Tasmania,” he said.

“The South Australian government is commissioning an independent review into the new GST arrangements, which we support, however, the risks of the new GST distribution arrangements are ongoing.

“Our position is clear – the guarantee provided by the Australian government should be a permanent arrangement, or we should revert back to the previous model.”