Breakfast with Treasurer Morrison: proactive states should not be penalised through GST carve up

Written on the 30 June 2017

Broome Chamber CEO Jael Napper and President Peter Taylor attended a breakfast with Treasurer Scott Morrison this morning to discuss the Productivity Commission Review into the GST carve up.

WA is currently receiving 34c for every $1 it collects in GST, as opposed to NT which receives $4.66.  The Premier McGowan's submission to the Inquiry would see the floor price share to WA raised to 80c.

While offering an indication to the Chamber that WA is looking positive toward a greater share, the Treasurer played coy on any indications of what the Inquiry will recommend.

"States who are proactive in growing economies to support themselves should not be penalised, particularly if others aren't realising their opportunities," said Mr Morrison.

He explained the method of 'horizontal fiscal equalisation' which rationalises the GST share, however clearly stated that this doesn't give a leave pass to states and territories to not act on opportunities within their capacity, alluding to the NT moratorium on hydraulic fracturing midst a national gas supply shortage among other situations in Vic and NSW.

"When you look at energy markets and constraints on access to gas around the country we have a key issue in rising electricity prices.  We have to have a system that rewards states for ensuring growth comes first and WA has done that."

Mr Morrison assured that WA isn't alone, and that current experiences of the state's economy are in line with national and international trends and that small to medium businesses should always remain the focus for growing economies.

"WA is an acute part of the challenge for our national economy - it's at the pointy end of a significant move out of the mining investment boom and that has had an impact on household incomes and state budgets. 

"But diversification and moving on to the next phase is also a national story.  We need to ask what we can do every day to ensure people get better wage outcomes as a result of businesses doing better," Mr Morrison said in explaining that wage rises don't happen in a businesses going backwards.  When businesses are more successful wages improve in SME's but that doesn't necessarily happen for wages in big businesses.

"Slow wage growth is systematic worldwise and not unique to Australia.  Globalisation, technological change and fossil fuels industry changes have disrupted the 26 year record run.

At the breakfast, the Treasurer addressed the argument of gambling royalty distribution which was a strong campaign topic for the recent Nationals leader Brendon Grylls in the last election, questioning why Eastern states should get a cut of WA royaltiesyet WA doesn't receive a cut of Eastern gambling revenue.

"If NSW wanted to eliminate an $8b payroll systmen, the GST system would not automatically compensate that loss," he said. 

"Until 2009 the Commonwealth Grants Commission (CGC) used household disposable income to calculate disbursements - as WA had a higher income it was at a disadvantage but this was corrected post 2009.

"Gambling revenue is still included in GST calculation but with no impact to WA regardless of whether the state has pokies or not."