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State treasurers trade GST tensions -

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State treasurers trade GST tensions

Kirsten Aiken reported this story on Friday, August 14, 2009 12:38:00

ASHLEY HALL: A debate about which state gets what share of the GST take has re-ignited
long-standing tensions between the state treasurers.

Western Australia and Queensland have upset the other states by forming an alliance to work on
getting a greater share of GST revenue for themselves.

The Commonwealth Grants Commission is currently revising the formula it uses to distribute the
funds, as Kirsten Aiken reports.

KIRSTEN AIKEN: The stakes are high. The Commonwealth Grants Commission is revising the formula it
uses to share GST revenue among the states and territories - a process it embarks on once every
five years.

The Grants Commission must decide how to distribute the funds based on the states and territories'
fiscal health, the size of their populations and the services they deliver.

A draft report suggests increasing Queensland and Western Australia's share - a proposal New South
Wales claims will cost it up to $500 million in lost revenue.

The Treasurer is Eric Roozendaal.

ERIC ROOZENDAAL: What we have here is West Australia and Queensland ganging up on New South Wales
and Victoria in a so-called "Axis of Evil" to try and squeeze more GST money out of New South
Wales.

Frankly my job is to protect New South Wales families and get a better deal in terms of the GST cut
for New South Wales and that's what I'll be doing.

ANDREW FRASER: Andrew Fraser, Treasurer of Queensland, member of the Axis of Evil.

KIRSTEN AIKEN: The Queensland Treasurer making light of the reaction to his State's alliance with
the west.

ANDREW FRASER: Queensland and Western Australia have been the powerhouse performers in the nation's
economy and the fact is that per person, pound for pound, Queensland and Western Australia received
less GST than New South Wales and Victoria.

New South Wales this year is in fact getting, is a net beneficiary. Its relatively has gone above
the line because of its underperformance in recent years. And Queensland and Western Australia,
because of their stellar performance in recent years are the ones that have been contributing the
most to the GST pool, pound for pound, person for person.

KIRSTEN AIKEN: But isn't it because Queensland and Western Australia have performed so strongly
economically that they should make a contribution in terms of GST to other states?

ANDREW FRASER: Well we are of course supportive of the Commonwealth Grants Commission role in
providing for that equalisation and certainly for smaller jurisdictions like Tasmania and the
Northern Territory that's appropriate.

But this just isn't a debate about the straight up and down person for person GST allocations. This
is about recognising the way in which the allocations are made by the Grants Commission.

KIRSTEN AIKEN: But Mr Roozendaal insists the Grants Commission has got it wrong.

ERIC ROOZENDAAL: It is complicated. But simply what they want to do is basically support the states
with growing populations at the cost of states like New South Wales that haven't got the same level
of growth in populations.

KIRSTEN AIKEN: But surely states with more people need more money?

ERIC ROOZENDAAL: In fact if New South Wales was to receive GST on a per capita basis we would
receive a lot more. Over the last 10 years since the GST has been introduced, New South Wales has
supported the other states in terms of GST revenue by around $15 billion.

KIRSTEN AIKEN: But is New South Wales supporting those states? I understand that New South Wales is
now a net beneficiary from the GST carve-up.

ERIC ROOZENDAAL: Well there has been a change in the last, in the very last part of this GST
agreement but over the life of the GST since 2000 when it came in there has been around $15 billion
of support to the other states from New South Wales.

KIRSTEN AIKEN: Alan Morris is the Commissioner of the Commonwealth Grants Commission. He says while
the draft report is by no means final, it makes sense the faster growing states be compensated for
the capital expenditure required to deliver key infrastructure such as schools and hospitals.

ASHLEY HALL: Kirsten Aiken.