Member for Canning Andrew Hastie has welcomed today's decision for a fairer GST carve-up.
Federal Treasurer Scott Morrison has accepted eight of the nine recommendations from the Productivity Commission's review into the Goods and Services Tax carve-up.
The Turnbull Government’s changes will reinforce and protect the ‘fair go’ system used to distribute the GST, called Horizontal Fiscal Equalisation or HFE, that supports the services all Australians rely on, especially in smaller states, while removing the volatility in how these funds are distributed by removing the impact of external shocks, like a mining boom.
Western Australia will see an extra $4.7 billion flow back into the state over the next eight years.
The Government will also implement a floor of 70 cents per person, per dollar of GST, below which no State’s relativity can fall, from 2022-23, rising to 75 cents from 2024-25.
Given the formula is now based on a more stable benchmark, it is highly unlikely relativities would move below the new floor.
Member for Canning Andrew Hastie welcomed the announcement.
“Today’s GST announcement is fantastic news for WA," he said.
"The Government’s plan will deliver an extra $4.7 billion to the WA economy, introduce a floor of at least 70 cents in every dollar to WA’s annual GST allocation, and ensure a long-term fix to the GST system.
"Over the past 18 months thousands of people from across the Peel region have signed petitions to help me advocate for a GST system that’s fair for WA. So I want to thank everyone for their involvement and support. The Government’s plan is a victory for us all.”
The first injection into the GST distribution will be worth $600 million in 2021-22, the first year of transition to the new equalisation standard.
The Commonwealth’s contributions in the following years would be equivalent to indexing this injection at the same rate of growth as GST collections in those years.
This would be followed by a second injection of $250 million in 2024-25, at the same time the 0.75 cent floor would be introduced.
The combined additional Commonwealth funding would then be indexed to grow in line with GST collections on a permanent basis.
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