The federal finance minister has argued that Western Australia’s GST share should be frozen at current rates, leaving the Barnett government hopeful that will be the recommendation to the Council of Australian Governments (Coag) meeting on Friday.
Mathias Cormann, a West Australian senator, wrote in the News Corp owned Sunday Times that the Commonwealth Grants Commission recommendation that WA get less than 30 per cent of the GST it collects was, “unfair and cannot possibly be sustained”.
The federal treasurer, Joe Hockey, told a national meeting of treasurers on Thursday that the Commonwealth Grants Commission had recommended WA’s GST allocation fall from its current record low of 37 cents in the dollar to less than 30 cents.
He was unable to get other state treasurers to agree to lift WA’s allocation and is expected to make a decision on how to resolve the conflict this week, which will be put to the states at Coag.
Cormann’s declaration is being taken in WA as an early indication of Hockey’s call.
In the Sunday Times column, Cormann wrote that the GST allocation was “squarely an issue for our federation” and “needs to be resolved in the national interest”.
“The protestations from some that WA used to be a beneficiary of fiscal equalisation for many years and should stop complaining do not stand up to scrutiny,” he said.
“Yes, under fiscal equalisation arrangements since 1981, WA has been a beneficiary for 19 years while contributing to others for just 15 years.
“But during that whole period, no other state or territory across Australia has ever experienced its share fall below 81 per cent.”
WA has been complaining of an unfair GST allocation for several years and is campaigning, with the support of Queensland, New South Wales and Victoria, for a change from the system of horizontal fiscal equalisation to a per capita distribution system.
A rapid fall in iron ore prices has wiped out more than $2b in expected royalties from the WA budget in the past 12 months and made the situation more desperate.
Hockey and Cormann have drawn criticism in WA for linking the GST allocation to WA’s recalcitrance in failing to privatise assets like the TAB and the poles-and-wires electricity network, despite the federal government offering financial incentives.
Privatisation, Cormann said, would give WA, “immediate access to billions of dollars in federal incentive payments to support such investments through our federal asset recycling initiative,” which WA was missing out on because “there does not seem to be any sense of urgency here in WA to deal with this”.
WA’s treasurer, Mike Nahan, told reporters on Friday that WA would not discuss economic restructuring if it was linked to GST payments, and said WA was conducting its own economic agenda, “on our own time, on our own process, on our own priorities, not the commonwealth’s”.
Speaking from Delhi, Barnett said raising privatisation in a GST debate was a “huge mistake in my mind and he [Hockey] will not be popular in WA because of that”.
Selling the TAB has been raised by Barnett, who told parliament in February that, “a betting agency is not a proper or normal function of government.”
WA is the only state that still has a state-owned betting agency, and Barnett has said that selling the TAB could raise $1b but, as of February, it had not been discussed by cabinet. The National party, which is the minor Coalition partner in the Barnett government, opposes the sale.
Nahan is waiting to receive a final GST determination to finalise his own budget. The state budget has already been pushed back a week to May 14.
