$750m GST black hole

TASMANIA could struggle to fund essential services in a decade because of an unfair GST sharing deal that will drain an estimated three-quarters of a billion dollars from the state’s coffers.

State Treasury on Monday released an occasional paper examining the distribution of GST revenue between the states.

The federal government has made changes that boost Western Australia’s share, but has promised to leave no other state worse off.

But the Tasmanian Treasury analysis reveals every Tasmanian will be $147 a year worse off a year when that guarantee ends in 2027-28 – while West Australia is $1945 per person better off.

“The inequity embedded in the new GST distribution is rapidly becoming apparent,” the paper says.

“From 2031-32, Tasmania is estimated to be $100m per annum worse off on an ongoing basis.

“This may significantly impact Tasmania’s ability to provide essential services, such as health, education and emergency services.”

GST revenues make up 41 per cent of state government revenue — and this year’s budget saw a windfall gain.

The WA government will be $5.6bn a year better off in the next few years thanks to soaring mining revenues – almost the same as the entire Tasmanian government expenditure. After the WA government delivered a $5bn surplus in is recent state budget, Premier Peter Gutwein (pictured) said the state should be “embarrassed”.

Treasury’s occasional paper says every state is suffering as a result of WA’s good fortune.

“This indicative modelling indicates that Western Australia is by far the main beneficiary of the new arrangements and that Tasmania (and the majority of other jurisdictions) will be worse off under the new arrangements,” it says.

“When the guarantee ends in 2027-28, Treasury has forecast that Tasmania’s GST revenue will decrease by $83m in that year under the new arrangements or $147 per person.

“In comparison, Western Australia is expected to gain $5.6bn, or $1945 per person, in GST revenue in 2027-28 under the new arrangements.”

Mr Gutwein said the government would fight for the state’s fair share of GST revenues.

“We have been very clear that while we welcome the guarantee that is in place until 2026-27, the current GST distribution system is seriously flawed 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 and our position is clear – the guarantee provided by the Australian government should be a permanent arrangement.”