Billions on line in Australia’s GST fight ahead of fast-tracked Productivity Commission interim report

Fired-up WA Premier Roger Cook says the State is “ready to fight” as fears grow that a GST distribution review — brought forward from the end of the month — will recommend ripping up or scaling back the deal for WA’s share of $9 billion a year.

The release of the highly anticipated Productivity Commission interim report into the 2018 GST distribution reforms has been fast-tracked to Friday and will be a watershed moment in WA’s fight to retain its 75¢ floor. The commission and the Federal Government have been under intense pressure to change the current arrangements.

“Whatever the interim report says, we’re prepared to go hard before a final decision is made later this year,” the Premier said yesterday.

“Make no mistake, we’re throwing everything at this and we’re ready to fight.”

And he had this message for the whingers in the east as they try to get their hands on WA’s GST: “I’ll always do what’s right for WA. To the east coast commentators and every other State and Territory, I’d say this: ‘hands off’.”

There are concerns the commission will bend to the wishes of politicians and business leaders in the Eastern States whingers and recommend changes to the way the annual GST revenue is divvied up between States and Territories. It would likely result in the 75¢ floor for WA being abolished.— abolishing the 75-cent floor for WA.

“The very real risk is the Productivity Commission accepts the argument of NSW, Victoria and South Australia that the 75¢ floor rewards WA,” WA Liberal senator Dean Smith said yesterday.

Even though Prime Minister Anthony Albanese has assured Mr WA Premier Roger Cook Cook and Treasurer Rita Saffioti that WA’s GST deal will not be ripped up, the PM’s decision to walk away from previous promises on negative gearing and capital gains tax has cast doubt on him keeping his word.

Senior Albanese Government minister Chris Bowen did not deny changes were coming when asked yesterday whether it was time to re-visit the current GST arrangements.

“There will always be States who say they don’t get enough (GST), basically, and fair enough. That’s their job, to argue the best for their State,” Mr Bowen said.

“The Commonwealth’s job is to come up with a fair system.”

The WA Government has the backing of thousands of West Australians on GST. Close to 6000 people have signed a Chamber of Commerce and Industry WA online petition to protect the 2018 deal.

Daniel Kiely, the chamber’s chief economist, said the strong response from the public showed West Australians knew how important GST revenue was to the State.

“Before the current deal that locked in a minimum return to WA on the GST we pay, our State was getting as little as 30¢ back from every dollar of GST collected,” Dr Kiely said. “It’s clear that we simply can’t go back to that system, where WA was doing the heavy lifting for the national economy, but getting little back in return. People in WA remember how it felt to see so much of our hard-earned money go east and they’ve made it clear by the thousands that they don’t want it to happen ever again.”

In 2018, the Coalition government legislated in Federal Parliament that WA could not receive less than 75¢ for every $1 it sent to Canberra. WA still receives less than other States and Territories in GST revenue.

Opponents to the 2018 reforms point out that Federal governments have to top up States and Territories to the tune of tens of billions of dollars to make sure they are no worse off as a result of the deal.

Economist Saul Eslake, a critic of the 2018 arrangement, earlier this year said the top-up payments to States and Territories would be in the vicinity of $60b before the end of this decade.

The NSW Government, which gets 82¢ in the dollar in GST revenues, wants WA’s GST take to dip to 50¢ in the dollar.

“NSW proposes an alternative model that returns to the pre-2018 equalisation arrangements from 2030-31 with the introduction of a relativities safety net of 0.50 funded by the Australian Government,” the Minns Labor Government argues. “This is a reduction of the 0.75 floor.”

The WA Government has spent months campaigning against changes to GST, arguing WA’s annual take would be about $6b less a year if the floor was removed.

“As I’ve always said, WA’s economy powers the nation and that’s why we won’t settle for anything less,” Mr Cook said. “We have the strongest economy in the nation and we want to keep it that way so we can create jobs and deliver on projects that matter to West Australians. The Prime Minister has always backed the GST reforms, but we know other States are eyeing off our share.”

CCIWA will send its online petition to WA Federal MPs and expects them to back WA. Dr Kiely said a cut in WA’s GST share would undermine the nation’s prosperity.

“WA is the economic engine room of the nation and we’ve seen significant population growth to deliver on the demand for our natural resources,” he said. “If WA’s GST share is cut, it could mean cuts to the services and infrastructure we need to support the nation’s prosperity.”

Treasurer Rita Saffioti said without the 2018 reforms, we risk “$6 billion being ripped from our State every year.”

“What some commentators don’t appreciate is that we invest our GST into critical economic infrastructure like ports, roads, power and water,” Ms Saffioti said. “That investment from our GST share gets major projects off the ground to create jobs and drive the national economy.”

Following Friday’s release of its interim report, the Productivity Commission will also hold public hearings in September — in which individuals and organisations can further state their cases before a final report is handed to the Federal Government at the end of this year.

Western Australian Liberal Senator Dean Smith has written to the Productivity Commission, calling on it to hold public hearings in Perth and Port Hedland as part of its inquiry into the 2018 GST distribution reforms.

“Perth must be included in the Productivity Commission’s public hearings, but there is an equally compelling case for the Commission to travel to Port Hedland,” Senator Smith said.

“The Pilbara is not just an economic powerhouse for Western Australia—it is an economic powerhouse for the nation, generating an extraordinary share of Australia’s export income and supporting economic activity across the country.

“Commissioners should come to Port Hedland, see that contribution firsthand and hear directly from the businesses, workers and communities that help generate Australia’s prosperity.”

“The future of GST distribution should not be determined from Canberra and the eastern states alone.

“Western Australians have an enormous stake in this debate and deserve a meaningful opportunity to be heard before the Commission reaches its final conclusions.”