Economics pundit forecasts $475m headed for Tassie

AN extra $475m in GST payments awaits Tasmania in Tuesday’s federal budget.

Leading economist Saul Eslake also expects no rises in taxes in the budget and says the extra GST will help fund election promises.

“The most important thing for Tasmania – which we know already because it was incorporated into the pre-election fiscal outlook report issued by State Treasury during the election campaign – is that Tasmania will get an additional $475m from its share of the GST,” Mr Eslake said.

“That’s because the overall GST pie has been revised upwards due to stronger-than-expected consumer spending across the Australian economy, and the Grants Commission’s most recent report recommended an increase in Tasmania’s ‘relativity’ (ie our ‘share’ of the GST pie).

“This upward revision to GST revenues will pay for a fair chunk of the spending promises the government made during the election campaign.”

However, Mr Eslake said Tasmania was “vulnerable” to shifts in the amount of GST for reasons “totally beyond our control.”

“Our GST revenue is at risk when the ‘transitional guarantee’ – that no state or territory will be worse off as a result of the changes the Morrison government made in 2019 to appease greedy Western Australia than they would have been under the ‘old’ system – expires in 2026-27,” he said.

Mr Eslake said extra spending on aged care for home care packages and childcare would not benefit Tasmanians as much as people interstate.

“Tasmania will benefit disproportionately from this simply because we have an above-average proportion of older citizens,” he said.