WA business welcomes GST inquiry

30 April, 2017

The Western Australian business community has welcomed today’s announcement that the Turnbull Government will order a Productivity Commission inquiry into the GST distribution model.

The Chamber of Commerce and Industry of Western Australia (CCI) has called for this review as business believes the current GST system removes incentives for states to develop under-utilised industries, to the detriment of the national economy.

“Today’s announcement is a positive step forward for both WA and the nation – the current GST system removes incentives for states to grow their underdeveloped industries, which means WA loses out in the GST carve-up and the national economy loses opportunities to grow,” CCI Chief Economist Rick Newnham said.

“The GST’s Horizontal Fiscal Equalisation model means some states pick up more GST revenue than they would need if they grew their own state resource industries and created local jobs – WA business is extremely pleased Treasurer Scott Morrison will instruct the Productivity Commission to examine the merits of the current GST system, to ensure states are appropriately incentivised to optimise national economic growth.

“CCI has proposed a ‘partial equalisation’ GST model– rather than bringing every state up to the level of the nation’s highest performer as we do now, each state should instead be brought up to the national average of service delivery capacity, with the excess GST then evenly distributed on a per capita basis among states and territories. This will ensure every Australian citizen has access to the national average of public services, but will also drive states like NSW and VIC to develop their own resource industries and grow the national economy.

“CCI members have identified the GST carve-up as a key issue impacting business in this state – CCI and the Australian Chamber of Commerce and Industry will continue to work together to call for GST reform in the national interest.

“CCI and WA business community thank all WA politicians who have fought for our state to get a fairer share of the GST – WA business also thank the Turnbull Government for taking today’s important first step by initiating the Productivity Commission review and remaining committed to top-up payments for the WA budget as an interim measure.

“CCI and the WA business community look forward to continue working with federal, state and business leaders to reform the GST system and create an environment that encourages national economic growth.”

Media contact: Kate Hodges – 0448 928 227