States reject Coalition’s GST pork barrelling

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By Leith van Onselen

The Morrison Government’s proposed changes to the formula for distributing GST revenue was rejected yesterday by the majority of state treasurers. While the reforms received support from Western Australia’s Treasurer Ben Wyatt, the other state treasurers warned that the federal government must guarantee that no state or territory will be worse off. Federal Labor also opposed the proposed formula shakeup, whereas Prime Minister Scott Morrison said he would take the GST policy to the upcoming election if it is blocked by parliament. From The Australian:

…five treasurers — including Liberals from NSW, South Australia and Tasmania — demanded the Prime Minister alter the planned laws, arguing that without a legislated guarantee, some could be worse off if economic conditions changed. The states-led revolt means the federal Opposition Leader is more likely to block the legislation unless it provides the guarantee, setting the scene for a battle when parliament resumes on October 15…

Victorian Labor Treasurer Tim Pallas, NSW Liberal Treasurer Dominic Perrottet, Queensland Labor Treasurer Jackie Trad, Tasmanian Liberal Treasurer Peter Gutwein and South Australian Liberal Treasurer Rob Lucas presented a united front.

The GST distribution should be based on rigorous assessment, not political expediency. The Coalition’s primary motivation for changing the GST is to pork barrel Western Australia, thereby shoring up its voter support in the lead-up to the upcoming federal election.

This is the antithesis of sound policy making. The states are right to reject it.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.