New GST deal aims at fair share

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.

He will put to his state and territory counterparts in September a deal to iron out some 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 that will ensure the fiscal capacity of all states and territories is at least the equal of NSW or Victoria (whichever is higher), evening out the impact of extreme events such as the WA mining boom.

But Mr Morrison said the changes, involving 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,” he said.

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 GST payments in 2018/19, rising to $112.25 billion in 2028/29.

From 2022/23, the Federal Government will put in place a new “floor” of 70c a person per dollar of GST, rising to 75c from 2024/25.

Mr Morrison rejected broadening the base or raising the rate of the GST. Asked how the government could afford the extra money, he said the “real kick-in” was when the Budget was in surplus of at least 1 per cent of GDP.

Opposition Leader Bill Shorten will 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.