WA makes final appeal to Productivity Commission to keep GST deal

• Cook Labor Government's formal response to the Productivity Commission's Interim Report into the 2018 GST Reforms submitted
• Western Australia rejects the Commission's interim recommendations to unwind the reforms that protect WA's fair share of the GST
• WA's GST deal is working for the nation and must be retained
• Productivity Commission's interim recommendations could rip up to $6 billion per year from WA's economy
• Productivity Commission final report due in December

The Cook Labor Government has lodged its formal response to the Productivity Commission's Interim Report into the 2018 GST Reforms.

Western Australia rejects the Productivity Commission's recommendations handed down in August, which could lead to between $1 billion and $6 billion being ripped from the State each year.

The Cook Labor Government's latest submission to the Productivity Commission highlights:

• that the current GST distribution arrangements must be kept, providing a reasonable balance between supporting the smaller states and territories, while not punishing states like WA for growing and developing their economies;
• the 2018 GST Reforms are achieving their aim by addressing significant flaws under the pre-2018 GST distribution system, including the dominant state effect that would lead to WA losing about 90 per cent of its iron ore and lithium royalties to other states. No other state experiences this level of redistribution, with New South Wales and Queensland losing 20-40 per cent of coal royalties to other states;
• in contrast to mining revenue, the GST system effectively incentivises states to increase gambling revenue as they can keep all additional revenue, which already totals some $6 billion per year;
• all states and territories, as well as the Commonwealth, have been better off since the 2018 GST reforms were introduced due to higher-than-expected iron ore prices, which have far outweighed the additional cost to the Commonwealth of its no worse-off guarantee; and
• repealing the 2018 GST Reforms would move Australia away from all other OECD Federations that seek to balance equity and productivity through partial rather than full equalisation.

The Productivity Commission's interim report recommended options including a return to the pre-2018 reforms, which could result in WA's per person share of the GST plummeting from 82 per cent to just 24 per cent, even lower than when the reforms were implemented.

No other state has ever had a population share below 80 per cent.

Even with the reforms in place, WA is still making the equal largest per capita GST contribution of all states, with an annual GST subsidy of more than $2 billion a year.

This is just one part of WA's overall fiscal contribution to the Federation, with the State contributing by far the most to the Commonwealth through revenues such as company taxes.

The Cook Labor Government argues in its submission this broader contribution has not been adequately acknowledged by the Productivity Commission in its interim report.

WA continues to drive the national economy, accounting for almost half the value of the nation's exports, 50 per cent above its population share of economic output and almost double its population share of business investment.

The Cook Labor Government is committed to keeping WA's economy the strongest in the nation, which has taken decades of proactive government support and investment to build the State's world-leading mining industry.

The WA Government submission can be viewed at: wa.gov.au/GST

Comments attributed to Premier Roger Cook:

"Our response to the Productivity Commission sends a clear message: hands off WA's GST deal.

"The 2018 GST reforms are doing exactly what they were designed to do by giving states certainty, rewarding economic growth, and backing the investment that powers jobs and productivity across the nation.

"That's why Prime Minister Anthony Albanese has unequivocally backed the reforms.

"They make sure WA is no longer punished for its success and that Western Australians receive a fair return for the wealth they help create.

"Western Australians know what is at stake.

"A fair GST share helps fund the hospitals, schools, housing, and infrastructure our growing State needs, while supporting the jobs that keep our economy strong.

"WA will never stop fighting to get its fair share, and Western Australians will settle for nothing less."

Comments attributed to Treasurer Rita Saffioti:

"The Cook Labor Government is not backing down in our fight to protect Western Australia's GST deal so our economy can continue to power the nation.

"We want the Productivity Commission to recognise the strong, evidence-backed case we have consistently put forward in its final report.

"Our latest submission shows the Productivity Commission's recommendations to scrap the 2018 GST reforms area unsubstantiated, contradictory and would undermine economic growth.

"We have been clear that this debate can't just be about how we divide up the existing pie, we need to be encouraging states to grow their economies for the benefit of the entire country."