WA's Former Premier Proposes New GST Distribution Model
Colin Barnett, former Premier of Western Australia, has proposed a new model for distributing GST funds among states and territories. His proposal would allocate 90% of the funds based on population, with the remaining 10% distributed at the federal government's discretion to jurisdictions in need.
This proposal would significantly benefit WA, which has received less GST revenue under the current needs-based system due to its large resource royalties. However, it would result in reduced funding for the Northern Territory, Tasmania, South Australia, and the ACT, which currently receive a higher share of GST based on their needs.
Barnett argues that his model would eliminate the need for a floor on GST distribution and the current top-up payments from federal tax revenue, which are costly to the budget. He believes it would also end the ongoing debate over the GST carve-up.
However, Saul Eslake, a Tasmanian economist, strongly criticizes Barnett's proposal. He argues that the needs-based approach to GST distribution ensures a more equal provision of health care and other social services across Australia. He points out that WA was a beneficiary of this system before the mining boom and should contribute more now that it is wealthier.
Eslake believes that Barnett's proposal is unfair and would harm other states. He considers it the "worst public policy decision of the 21st century."
The debate over GST distribution is likely to continue, with WA pushing for a larger share and other states resisting any changes that would disadvantage them.