WA business left to go solo in GST fight

The West Australian, 4 July 2017

Business groups across the country have left WA to fight alone for a change to the GST distribution system.

In submissions to the Productivity Commission’s inquiry into the GST and how its allocation may be hurting Australia’s economy, non-WA business groups have either chastised WA for its Budget management or denied there was a problem.

While the WA Chamber of Commerce and Industry backed substantial change, it has failed to win over other business groups.

The nation’s biggest chamber of commerce, in NSW, said there were no examples of the system hurting the nation’s overall economic performance.

It rejected some of the proposals from WA, arguing they appeared to have been “reverse engineered” to reap extra cash for certain States.

“The chamber does not support proposals which would grant special status to mining royalties as this would have the effect of undermining horizontal fiscal equalisation by delivering windfall gains to resource-rich jurisdictions at the expense of most (if not all) other jurisdictions,” the NSW submission said.

The South Australian business community went further, saying evidence suggested the system was not blocking reforms, highlighting the support in that State for mining development.

It rejected the idea of a floor on the GST or removing mining royalties from the Commonwealth Grants Commission’s calculations, though it was open to reducing the three-year averaging cycle.

But Business SA said it appeared the review was being driven by the failure of the WA Government to get its Budget in order.

“There is no underlying fundamental rationale to touch Australia’s HFE system which has served us well for over 100 years because one State jurisdiction, which has managed to turn the country’s longest mining boom into a $40 billion net debt balloon, has for only the last three years recorded Budget deficits,” it said. The Queensland Chamber of Commerce rejected suggestions HFE or the GST allocation had hurt productivity.

“CCI Queensland is of the opinion there should be no changes to the HFE system for distributing GST revenue,” it said.

Acting WA Premier Roger Cook chided the Labor Party’s Federal representatives for their submission to the commission.

The submission failed to outline any specific proposal to change the GST system and did not back the WA Government’s extensive list of reforms.

Mr Cook said that while there was a strong relationship between the State and Federal Labor parties, local representatives had to go further.