Prime Minister Turnbull has committed to reform of the GST system at the Liberal state conference in WA this weekend.
The reforms would see a floor value proposed at 70 cents per dollar contributed introduced to the GST system, though they won’t come until 2019.
“Only the coalition has a plan to set a GST floor in the future in a way that is fair, and will deliver a durable solution that addresses our national economic interest,” Mr Turnbull said.
“Over the next few years the GST sharing scheme will rebalance. Once that happens we will be able to consider a percentage floor below which no state or territory share can fall.”
“in the meantime the productivity commission is analysing the way the GST formula operates.”
Currently Western Australia’s share is 34 cents per dollar contributed, as a result of the way the GST is calculated.
The WA Chamber of Commerce and Industry (CCI)praised a plan to introduce a $100 million tax incentive for junior exploration companies in WA, but have said most of the benefits will leave the state as a result of the current GST imbalance.
CCI Chief Economist Rick Newnham discussed a solution that had been presented to the Turnbull Government in order to ensure WA’s GST share doesn’t fall further.
“There is an enormous irony, however, in this announcement in that most of the royalties that will be generated from new mining projects will be lost to other states through the GST,” he said.
“What the Chamber of Commerce has recommended to the Prime Minister is a ratcheting GST floor, which is introduced right now at WA’s GST relativity, and then incrementally increased as WA recovers.”
“This ratcheting floor would leave no other state worse off in the next two years, and gives a guarantee to WA that their GST share won’t fall in the future.”
WA opposition leader Mike Nahan said that he was happy with the timeframe for Mr Turnbull’s reforms, criticising federal opposition leader Bill Shorten for only offering top up payments.
“Me and my federal and state members will be not giving up on this,” he said.
“Mr Turnbull committed to West Australians fundamental reforms, he means it, and we will work with him to deliver it.”
Mr Turnbull also attacked Mr Shorten, calling him the most left wing Labor leader in generations.
“We are dealing currently, with the most left-wing Labor leader we have seen in generations” he said.
“You would have to go back literally generations to find a Labor party, an alternative government opposition, that is as left wing as this mob.”