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Treasurers set for GST battle

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Treasurer Joe Hockey will continue discussions today with his state and territory counterparts about the annual carve-up of GST revenue.

However, a battle is brewing with Western Australia making threats about its future cooperation with the Commonwealth.

The treasurers met on Wednesday night in Canberra with Hockey having already had several separate discussions with Mike Nahan from Western Australia in recent days.

Hockey believes WA is hit the hardest under the present arrangements for distribution of GST revenue.

Reports suggest the Commonwealth Grants Commission, which allocates the revenue collected from the GST, has recommended keeping the status quo.

Hockey says any change to the way the GST is handed back to the states will have to be backed by a “consensus” decision at the twice-yearly gathering on Thursday.

However, significant differences have emerged ahead of the talks.

WA’s Nahan is threatening his state could stop co-operating with the Commonwealth if the carve up of GST revenue does not change.

He urged his counterparts to negotiate in good faith about revamping the tax.

Nahan told ABC radio the current carve-up arrangement was based on two-year-old iron ore prices, which have since plummeted, meaning the state has had to borrow money to hand over to other states.

South Australian Treasurer Tom Koutsantonis said WA had taken full advantage of iron ore prices going up, and should have been prepared for the prices to drop.

“I think people trying to gain the system for their own benefit really puts the federation at risk,” Koutsantonis told 891 ABC radio.

“And the federation is based upon an independent analysis by the Commonwealth Grants Commission. That Commonwealth Grants Commission is done independently by experts about making sure that all of the distributions of GST is done fairly, and it’s been done fairly since the introduction of the GST and every state has accepted this.”

He said every government had seen revenues declining but the WA Government wanted to change the funding formula to suit themselves.

“The reality is, if the Western Australian government showed the same spending the South Australian government had shown they’d still be in surplus. And they’re spending experience has grown by about 7 per cent per capita.”

Victorian Treasurer Tim Pallas also rejected WA’s bid to garner more GST revenue at the expense of other states.

“The GST fund is not ballast for the federal government to provide for an isolated one-off situation,” he told ABC Television of WA demands to adjust the distribution formula to take account of falling iron-ore prices.

“If they’ve got a problem they need to work that out with the Federal Government.”

– with AAP

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