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GST fix will require political courage

Western Australia’s GST mess will not be resolved until the McGowan Government persuades its Labor comrades in Canberra to commit to a solution.

Treasury spokesperson Terry Redman presented at today’s Productivity Commission hearing into the GST distribution system, held in Perth.

The Nationals were encouraged by the Commission’s draft report, released last month, which recommended the GST formula be altered so states are benchmarked either to the level of the second strongest state or the average of the states.

If implemented, the change would see WA pocket billions of dollars in extra revenue.

However, Mr Redman said, “political will” remained the key ingredient missing in a fairer deal for Western Australia.

“The acid test will come after the Productivity Commission hands down its final report in January,” Mr Redman said.

“So far Federal Labor and would-be Prime Minister Bill Shorten have shown zero appetite for an overhaul to the GST system.

“If Mr Shorten intends to create political mileage by playing the other states off against WA then we stand to lose out. A bipartisan approach is required.

“Federal Labor’s ambivalence towards Western Australia’s plight falls squarely on the shoulders of the McGowan Government, which has failed to convince Mr Shorten of how crucial a GST fix is to the future of our State.”  

Mr Redman told the inquiry the perverse GST distribution formula was hampering efforts to address Western Australia’s structural budget deficit.

“WA facilitated the largest mining boom in living history – building the roads, hospitals and schools necessary for a population influx equivalent to that of Tasmania – yet saw most of the benefit eroded by the GST carve-up,” he said.

“Now, revenue solutions to address the State’s budget situation, such as The Nationals’ plan to update the 50-year-old special lease rental in BHP and Rio Tinto’s state agreements, are shackled by the GST formula.”

The Nationals last week made the party’s second submission to the Commission’s inquiry.

Leader Mia Davies said the submission argued reform of the GST system was in the best interests of national productivity.

“The Nationals have called on the Commonwealth to introduce an immediate floor and outline a path forward, with the ultimate goal of transitioning toward a model of partial equalisation,” Ms Davies said.

“The Productivity Commission has delivered a draft report that presents a clear mandate for change and we will hold the Commonwealth to account for that.”

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