Victoria
Mathias Cormann defends GST distribution system
Former senator Mathias Cormann has defended Australia's GST distribution system, despite a highly critical interim report from the Productivity Commission.
Former Western Australian senator Mathias Cormann has defended the nation's current Goods and Services Tax distribution system, declaring that it is working exactly as intended. His comments follow a landmark interim report from the Productivity Commission that labelled the arrangement costly and unfair.
According to reporting by the wire, Mr Cormann, who was a key architect of the 2018 changes to the GST carve-up, insisted the system remains fit for purpose. The former finance minister argued that the changes achieved their objective of establishing a stronger, more predictable floor for the GST revenue share of any state or territory.
The 2018 overhaul introduced a minimum floor of 70 cents in the dollar, which is scheduled to rise to 75 cents. This change has primarily benefited Western Australia, ensuring that its share of the tax revenue does not drop below the set benchmark, regardless of its mining royalty windfall.
However, the Productivity Commission's interim report delivered a scathing assessment of these arrangements. The Commission found that the current distribution method is costly, lacks transparency, and creates an unfair playing field for other states and territories. Critics of the system argue that Western Australia's shielded position leaves less money in the national pool for jurisdictions facing different economic pressures, such as Victoria and New South Wales.
The debate highlights ongoing tensions between state governments over federal funding. While Western Australia continues to advocate for the retention of the safety net, other jurisdictions are expected to use the Commission's findings to lobby for a return to the previous equalisation formula.
The federal government has yet to announce its formal response to the interim findings, and it remains unconfirmed whether any legislative changes will be proposed before the final report is delivered.
Observers will now be watching how state treasurers respond to the interim findings ahead of the next Board of Treasurers meeting.
This report draws on original reporting by Wire report.
Dedicated to a Stronger Victoria.
A message from the editor, August
Every story here is free to read. Only readers keep it that way.
We take no government money, run no paywall, and answer to nobody in Spring Street. That independence is paid for by a small number of readers, not the many who benefit from it. If just one in a hundred of today's readers gave $8 a month, our Victorian politics coverage would be funded for the year.
- Funds reporting, not shareholders
- Cancel in one click, anytime
- Supporter badge and reply access
Prefer a one-off? Send a tip. It takes about twenty seconds.