Victoria’s share of GST slashed from 1 July 2014
• Victoria’s GST revenue slashed by $286 million in 2014-15
• Broken GST system must be fixed so Victoria gets its fair share
• Victoria secures commitment for GST flaws to be scrutinised by Taxation White Paper reform process
Victoria’s share of the Goods and Services Tax (GST) is set to decline further, following the Commonwealth Grants Commission’s announcement of the GST annual carve up, Treasurer Michael O’Brien confirmed today.
“In 2014-15 for every $1 of GST collected in Victoria we will only get 88 cents back, compared to 90 cents this year. This fall will cost Victoria an additional $286 million in lost revenue,” Mr O’Brien said.
“This is in stark contrast to Queensland which will receive $1.08 back for every $1 of GST collected. This is the equivalent of Victoria paying $50 to every man, woman and child in Queensland.
“Why should Victorians receive 88 cents in the GST dollar when New South Wales receives 98 cents, Queensland 108 cents and South Australia 128 cents? Federation needs to be fair to succeed,” Mr O’Brien said.
“In 2014-15 Victoria will subsidise other states and territories with $1.5 billion of our GST revenue. This is equivalent to taking $252 from every Victorian to hand out to other states.
“$1.5 billion is more than four times the amount New South Wales provides as a subsidy to other states.
“That $1.5 billion taken from Victorians could fund 31 new generation trains or remove 9 more level crossings or build up to 130 new primary schools.
“Almost 25 per cent of Australia’s population lives right here in Victoria and we are only getting a 22 per cent share of GST revenue.”
However, Victoria has secured an important commitment to progress GST reform by ensuring the major flaws in the system will be examined as part of the Commonwealth Government’s forthcoming White Paper on Taxation and also the Commonwealth Grants Commission methodology review.
“I sought and received an assurance from Federal Treasurer Joe Hockey that Victoria’s concerns with the unfair GST distribution system will be examined via the upcoming White Paper on Taxation. This will provide a clear path to fixing a broken system,” Mr O’Brien said.
Victoria has welcomed an agreement by all jurisdictions for the Commonwealth Government to support asset recycling by providing incentive payments for governments that divest assets in order to invest in additional economically productive infrastructure.
“While Victoria has already done much of the heavy lifting of asset renewal, we are committed to looking for further opportunities to generate value from assets that can fund important new infrastructure,” Mr O’Brien said.
“I therefore welcome Treasurer Hockey’s proposal to provide incentive payments to states that can use the proceeds of asset sales to fund new, productive infrastructure.
“This will assist Victoria in relation to its integrated ports strategy and support the Coalition Government’s major transport infrastructure plans.”