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Lucas warns SA won’t support “unconscionable” GST deal

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UPDATED | State Treasurer Rob Lucas is warning the Federal Government he will strongly oppose any change to the current GST distribution deal.

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Lucas told other state and territory treasurers at a meeting in Melbourne this morning that the Marshall Government would oppose changes to the Horizontal Fiscal Equalisation (HFE) system used to determine each state’s GST share.

The changes to the system were recommended in a draft Productivity Commission report released last year after Western Australia’s share of the GST fell to an extreme low.

Lucas said he understood the Commonwealth Grants Commission update today would confirm that the HFE system was working “exactly as intended.”

“One of the original reasons we signed to this [GST] agreement was that Horizontal Fiscal Equalisation was the mechanism used to distribute this arrangement,” Lucas told InDaily.

“It would be unconscionable if the current Federal Government would become the first to break the deal.”

Lucas said when it comes to the carve-up of federal GST funds, he’s “singing from the same hymn sheet” as his Labor predecessor Tom Koutsantonis, who also argued against changes to the HFE.

The Treasurer’s warning comes as details emerge about the carve-up of GST revenue next financial year.

South Australia’s share of the GST will increase marginally from $1.43 for every $1 of GST to $1.47 in 2018-19, according to a government document obtained by Sky News.

However, it is understood the 2018 update for SA reveals a moderate decline in GST revenue in 2017-18.

Later, it was revealed the total GST pool for the coming financial year would be $65.8 billion – $3.4 billion up on this financial year, more than half of which was a result of new integrity measures in the GST system.

Out of the states, the overall level of funding will rise in NSW (up $519 million), Victoria (up $1.8 billion), WA (up $1 billion), SA (up $467 million), Tasmania (up $56 million) and the ACT (up $54 million).

Earlier, Lucas said the GST fluctuation was just one of the many issues buffeting the budget numbers “up and down.”

“There will be a moderate negative impact in terms of less GST impact, but for the first Liberal budget there will be a modest increase,” he said.

Western Australia and Victoria are reportedly the biggest winners from the GST carve-up.

Victoria’s share of the GST will increase from 93 cents to 98 cents for every $1 of GST.

Western Australia, which has for a long time argued the GST distribution was unfair, will also receive a boost from 34 cents in the dollar to 47 cents.

Western Australian Treasurer Ben Wyatt said the state was now on a “better trajectory of GST” but he expected some complaints from other states.

“If our relativity’s somewhat higher than we have budgeted, it may be [there is] the odd state that is lower than they budgeted,” he said.

“So you might start getting some complaints around it, not dissimilar to complaints that have been made by WA over the years.”

State and territory treasurers will meet with Federal Treasurer Scott Morrison this afternoon.

“The reality is each state and commonwealth Treasurer will push its well-established, long-held position [and] I can’t imagine [today] will be any different from that,” Lucas said.

“The real debate will occur when the Productivity Commission report comes in the next couple of months.”

– Additional reporting by Tom Richardson and AAP 

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