The Western Australian government claims the State would be $10 billion better off after submitting a range of proposals to reform the Commonwealth Grants Commission.
Premier Mark McGowan said the current arrangement was holding back WA’s economy and national economies, in its submission to the Productivity Commission’s inquiry into the nation’s annual GST carve up.
12 proposals have been put forward the State Government claims can improve the system that has cost WA more than $30 billion over the past 10 years.
The most appealing proposal would provide an equal, per-capita allocation of the GST’s $66 billion. It would allow some of the money to be set aside to help compensate States and Territories with particular problems to protect residents.
The plan would raise $10.5 billion over the next three years. It would erase all expected Budget deficits while providing the opportunity to pay down some of the debt.
Mr McGowan said the system was “broken” and needed reform.
“The current system is flawed – it fails to achieve its fairness objective and WA has been ripped off for too long,” Mr McGowan said.
He said the State Government had put forward a range of options that would help fix the system.
“WA is putting forward smart and reasonable options to put an end to an outdated and unfair system.”
“As Premier, I want to work constructively with everyone involved to achieve an outcome that will not only deliver WA the GST we deserve, but establish a fair system across the country.”
Treasurer Ben Wyatt said the current GST system did not benefit WA or other economies across the country.
“The current system of horizontal fiscal equalisation unreasonably disincentivises States from undertaking fiscal reforms or developing their economies,” he said.
“Western Australia has been penalised under the existing process on the assumption that our capacity to raise mining revenue is a fluke, rather than the long term-result of successive State Government policy decisions.”
“There is a large disincentive to develop industries and this needs to change, that’s why our approach is focused on a system that would improve national economic growth.”
However, the Federal Government said despite WA’s limited GST share, it is still on the agenda.
“It is the Turnbull Government that has actually stepped up and really seeking to try and address this issue,” Federal Treasurer Scott Morrison said.
“We’ll look at what their recommendations are and we’ll go from there.”
“This is not a process of haggling, this is a process of working out what’s best thing to do for the entire country.”