A ’fair go’ for states

Morrison heralds a level playing field in sharing GST income

CHANGING the way the GST is carved up among the states and territories is about a “fair go” for all Australians, Treasurer Scott Morrison says.

Mr Morrison will put to his state and territory counterparts in September a new deal to iron out some of the wrinkles in the GST revenue distribution system which has been in place since 2000.

Western Australia has long complained about its share dropping during the mining boom due to the way the existing system, known as horizontal fiscal equalisation, is benchmarked.

That benchmark will shift over eight years to a new standard ensuring fiscal capacity of all states and territories is at least the equal of NSW or Victoria (whichever is higher), evening out the impact of events such as the WA mining boom.

Mr Morrison said the changes, which would involve a permanent boost to the pool of funds, were not just about WA.

“The Commonwealth is investing in the fair-go principle ... which delivers the schools, the hospitals, the nurses, the police and the essential infrastructure,” Mr Morrison yesterday told reporters in Canberra.

The GST pool will increase by $7.2 billion from 2021/22 to 2028/29. States and territories are slated to receive $67.3 billion in 2018/19, rising to $112.25 billion in 2028/29.

The Federal Government will put in place the new “floor” of 70 cents per person per dollar of GST, below which no state’s relativity can fall, from 2022/23, rising to 75 cents from 2024/25.

Mr Morrison said it was a “completely reasonable expectation” other grants to the states would not be cut back and rejected the idea of broadening the base or raising the rate of the GST.

Labor leader Bill Shorten said he would look at the detail.

“I want to make sure that states are left with certainty that they don’t have to go cap in hand to Canberra whenever they want to fund a school or hospital,” he said.