An examination of the Commonwealth’s distribution of GST revenue to Victoria has found it to be unfair and likely to cost the State billions of dollars.
Commenting on a report from the Legislative Assembly’s Economy and Infrastructure Committee Report, Treasurer Tim Pallas said it condemned the Commonwealth’s inequitable GST revenue carve-up and lack of adequate investment in Victorian infrastructure projects.
Mr Pallas (pictured) said the Committee considered the adequacy of Victoria’s GST share under the ‘no worse off’ guarantee, legislated by the Commonwealth in 2018, and the impact of the expiration of the guarantee in 2026-27.
He said the Report found resources-rich Western Australia was the only winner in Canberra’s GST carve-up and if the system was not changed, and the ‘no worse off’ guarantee not extended, Victoria would lose up to $1.2 billion a year.
“This would be enough to employ 10,000 nurses for a year, submitted the Victorian Department of Treasury and Finance,” Mr Pallas said.
“Victoria is the only State to have subsidised other jurisdictions every year since the GST’s introduction and the Economy and Infrastructure Committee Report also found Victoria is also being short-changed on its fair share of infrastructure funding – that means less support for schools, hospitals, roads and rail.”
Mr Pallas said he had written to his Federal counterpart, Josh Frydenberg, urging him to allow the GST distribution reflect the disproportionate cost of the COVID-19 response in Victoria and NSW.
In his letter, Mr Pallas told the Commonwealth that without “sensible changes” to account for the out-sized impact of COVID-19 in the most populous States, Victoria could lose up to $3 billion in GST revenues over the next four years.
He said the Governments of Tasmania, South Australia and the ACT had also called for a new approach to GST distribution in submissions made to the Committee’s inquiry.
The Committee’s 75-page Inquiry into Commonwealth support for Victoria Report can be accessed at this PS News link.
