Despite an entire year passing since Prime Minister Malcolm Turnbull first acknowledged the imbalance in the GST equation WA is still no closer to a long-term solution.
Turnbull was in WA again over the weekend to address the Liberal Party state conference but made no commitments to a GST floor or any other solution.
The visit is being described as a missed opportunity after CCI chief executive Deidre Willmott wrote to all WA Federal Liberal Party members ahead of the conference calling on the Turnbull Government to immediately implement a floor.
The Prime Minister’s only announcement was $100 million to secure additional private investment in vital greenfield mineral exploration to drive the next wave of mineral discoveries.
CCI Chief Economist Rick Newnham says there is irony in the announcement and after a year of acknowledgment the GST distribution is broken, he will again fly back to the eastern states with no solution.
“CCI welcomes the announcement by the Turnbull Government of a $100 million tax incentive for junior exploration companies to drive investment in WA’s mining industry, which has been struggling to transition from its boom time era,” he says.
“The great irony of (the) announcement is that any additional mining royalties generated from projects incentivised by the $100 million scheme will largely flow to other states, with more than $33.5 billion of WA revenue being redistributed away from WA to other states since the GST was introduced.”
CCI’s call for GST reform follows recent state-wide polling commissioned by CCI, which revealed 12 per cent of Western Australians would switch their vote to Labor if they announced a GST policy that delivers a greater share to WA.
A further 15 per cent would be more likely to vote Labor if a GST policy was announced.
At the recent Labor Party state conference opposition leader Bill Shorten promised a $1.6 billion GST top-up for infrastructure funding if Labor are elected at the next Federal election.
Newnham says it could not be any more obvious what Western Australians expect from the Prime Minister right now, and that is to introduce a GST floor immediately.
“Any claim that the Government must wait for the outcome of the Productivity Commission’s inquiry to announce a GST floor is misleading,” he says.
“A GST floor can be introduced immediately without requiring the agreement of all states and territories.
“It is within the Treasurer’s authority to determine each state’s share of GST and to direct the Commonwealth Grants Commission to implement a floor.
“Both Malcolm Turnbull and Bill Shorten have indicated that 70 cents is a fair minimum for any state’s GST share.
“A ratcheting GST floor, as previously proposed by CCI, would ensure that no state is worse off in the next two years whilst giving certainty to WA’s future GST revenue.”
Newnham says after the Productivity Commission delivers its final report on the GST distribution next year the Government should commit to reforming the formula to incentivise growth by carving out 25 per cent of mining royalties or 20 per cent of all state revenue.
“This allows states to keep more of the revenue they generate when they fully develop their own economy, as WA has done,” he says.
►As WA’s peak business advocate, CCI works to elevate the concerns of WA industry to key nationwide decision-makers. Find out more about our advocacy efforts here.