One of the federal architects of Western Australia’s GST deal has rejected claims the arrangement was a costly mistake, despite a scathing report on the scheme.
A Productivity Commission report on Friday recommended scrapping a 2018 deal that transferred top-up GST payments to WA.
The payments are set to cost the federal budget $60 billion by the end of the decade, with the commission finding the changes made the GST system less equitable for the states.
Former Liberal finance minister Mathias Cormann, who helped oversee the GST when he was in office, said he disagreed with the report’s findings.
“It was a very important reform to federal financial relations, addressing a very significant unfairness for the state of Western Australia,” the former WA senator told ABC Radio on Monday.
“(The commission) acknowledge the deep unfairness and the extreme outcomes of the previous arrangements, but then recommend going back to the old system.”
Every state and territory government has called for the deal to be ripped up or heavily changed, bar WA.
The WA government, whose premier Roger Cook labelled other state leaders as “east coast clowns”, said his state needed to be properly compensated for its role in propping up the national economy through its resources.
Mr Cormann, who would not be drawn into the political commentary from Mr Cook, said the GST deal helped address imbalances in the GST system.
“(It addressed) a real problem when it comes to the incentive arrangements in our federation in relation to state economic development, in particular of the resources and mining sector,” he said.
Former prime minister Scott Morrison, who was treasurer when the GST deal was being drawn up, also weighed in on the report, calling it a renewed attack on WA.
“It treats the 2018 reforms as a zero-sum transaction in which WA gained and everyone else necessarily lost,” he wrote in an opinion piece in The Australian Financial Review.
“This was not a zero-sum game. There were important economic policy issues at stake that were addressed as part of the 2018 reforms, and they remain just as valid today and should not now be overlooked.”
Prime Minister Anthony Albanese said the federal government would wait until the commission’s final report on the GST deal was handed down by the end of the year, before deciding whether to scrap or change it.
SA Treasurer Tom Koutsantonis said the GST system as it stood was unfair.
“We’re using scarce income tax dollars to prop up a state that doesn’t need it,” he told ABC Radio.
“If there’s a natural disaster in New South Wales, and the commonwealth government put in disaster relief into New South Wales, the beneficiary is ultimately Western Australia.”
Australian Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national newswire and has been delivering accurate, reliable and fast news content to the media industry, government and corporate sector for 85 years. We keep Australia informed.
