Federal GST Distribution Overhaul “Bizarre”: Expert

A political expert has called the Federal Government’s proposal to change Australia’s GST distribution the most bizarre fix he has ever seen, claiming it is not an overhaul.

Murdoch University politics and policy senior lecturer Ian Cook believed the new measures that would give Western Australia a bigger share in the carve-up was a “farcical situation” that would not lead to benefits for young taxpayers.

“I’m not absolutely sure how it’s an overhaul,” Mr Cook said.

“It seems to be the sort of basic tinkering with the system to have actually made it quite different from what it used to be.”

Mr Cook believed it was simply a method to give money back to WA.

He said it would not fix the system because while “WA’s better off, we’re happier” he believed Australia’s GST system was still what the federal government called “broken”.

“They’re (federal government) basically pumping money in to hand back to WA. It doesn’t really seem to have any relationship to the money being raised in this process and then trying to have some sort of bottom line in terms of what states can expect back,” he said.

He also claimed the windfall would not help Western Australians facing increased household fees and charges.

“A lot of the debt burden and a lot of the sort of burden of taxation is falling on younger people and they’re seeing very little for it,” Mr Cook said.

“There’s no doubt that the young taxpayers are in a really difficult position, given that they’re trying to provide for the infrastructure and services.”

“If people are looking for the long-term relief from the sort of pressure that they’re under at a household level, I don’t think this is going to be delivered on in terms of the changing of the GST.”

The Federal Government introduced the new reforms on Thursday that would provide Western Australia $4.7 billion.

Under the plan, WA’s share of the GST would jump to 70 cents in the dollar in 2019-20, rising to 75 cents by 2024-25.

The state would initially receive top-up payments until 2020-21, worth $1.4 billion before moving to a system benchmarked to New South Wales or Victoria to provide stability of funding.

WA would receive $3.303 billion more over six years from 2021-22 to 2026-27.

The Federal Government had also promised all states would be better off under the new system by injecting extra funding into the GST distribution pool from treasury.

WA Treasurer Ben Wyatt welcomed the proposal but did not say it would reduce fees and charges.

“What I’ll do at this point is not start spending money that hasn’t landed in the WA government’s account,” he said.

However, Opposition Leader Mike Nahan claimed the McGowan Government stated the funds would be used to pay down debt and believed it should continue to do so.

“The 2017-18 budget McGowan government said there any windfall should be put aside to pay down debt,” Mr Nahan said.

“It was their policy,” Mr Nahan said.

However, Mr Cook said there were issues for the state if debt was the only focus.

“If we’re just going to focus on debt, we don’t do economic stimulus, we don’t have long term positive outcomes and we’re really not much better off than where we are right now,” he said.

Meanwhile, federal finance minister Mathias Cormann said the proposal would be part of the achievements that would be the difference heading to the next election.

“I don’t think it’ll surprise anyone that we intend to go to the next federal election with our record of achievement,” Mr Cormann said.

“Or do you want higher taxes, less investment, lower growth, fewer jobs, high unemployment and lower wages under Bill Shorten?”

“That will be the choice for the Australian people.”

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