Morrison-era GST deal with WA a multi-billion dollar mistake that should be reversed, Productivity Commission finds
Summary
The Productivity Commission (PC) says the 2018 GST deal with Western Australia (WA) was a costly mistake that should be reversed. The deal gave WA a fixed minimum share of GST payments, costing taxpayers billions and benefiting mostly WA while making the system unfair for other states.Key Facts
- The 2018 GST deal was requested by WA and implemented under the Morrison government, supported by Labor.
- The deal set a minimum GST share for WA, ensuring it would not get less per person than larger states like New South Wales or Victoria.
- Initial cost estimates for the deal were about $5 billion by 2024-25, but actual costs have reached nearly $23 billion and may total $60 billion by 2029-30.
- The deal has benefited only WA while other states like New South Wales have lost out on GST funds.
- The Productivity Commission says the system is now less fair and doesn’t meet its goals.
- Economists criticize the deal as bad public policy, causing unintended outcomes like WA gaining more GST even if other states face disasters.
- Most states and territories want a major overhaul of the GST system, but WA supports keeping the deal.
- The PC suggests, if no change happens, the government should at least make the current payments permanent to acknowledge the cost.
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