Fair GST distribution is Treasurer’s ‘number one concern’
South Australia is losing “hundreds of millions of dollars a year” thanks to the current Goods and Services Tax distribution scheme, says Treasurer Stephen Mullighan.
SA Treasurer Stephen Mullighan speaking at the UDIA State Budget Breakfast on Wednesday 28 June. Photo: David Simmons/InDaily.
Speaking at the Urban Development Institute of Australia’s State Budget Breakfast, Mullighan said equitable GST distribution was “the number one concern that state and territory treasuries have”.
“Under the previous coalition government, legislation was passed to provide a new much higher floor of GST revenues for Western Australia recognising that as a resource-rich state it can have big fluctuations in its revenues,” he said during a Q&A session led by InDaily’s Belinda Willis.
“Unfortunately that came into effect at the same time that it experienced a massive boom in its own revenues from the extraordinary demand for its commodities.
“This year Western Australia is receiving about $4.4 billion of additional GST from all of the other states and territories at the same time that they’re recording record revenue windfalls from their own state taxes and royalties.”
He said the “only thing that’s protecting us” was the temporary guarantee that states and territories wouldn’t be worse off under the new arrangements which came into effect in the 2021-22 fiscal year.
“The problem for us is our next budget will be the first year with our four year forward estimates where the last year no longer has the worse off guarantee in it, and so the concern is that by that year we could be still hundreds of millions of dollars worse off,” he said.
As such, the Treasurer said he met with his state and territory counterparts last week and “made it clear that the issue’s got to be resolved … in the next few months” to give treasurers certainty prior to commencing work on the 2024-25 state budgets.
“It’s a difficult issue for the Federal Treasurer because as much as I would like to go back to the previous arrangements – and so would all of my other state and territory colleagues – I can imagine the backlash that would come to a Federal Government and a Federal Parliament should they attempt to do that from Western Australia,” Mullighan said.
“Failure is not an option for the states and territories. We lose hundreds of millions of dollars a year. New South Wales and Victoria are losing in the order of $1.5 billion a year if they don’t have this guarantee.
“We simply must get an acceptable agreement and hopefully in the next six months.”
