SYDNEY: Treasurer Joe Hockey has told Western Australia to reform its economy in return for him fighting the other states to give it an increased portion of the $57 billion goods and services tax pie.
Despite being opposed on Thursday by the other seven states and territories, which will lose revenue if Western Australia is given special treatment, Mr Hockey said he would push ahead because of a plunge in the state’s financial fortunes.
The Commonwealth Grants Commission, which administers allocation of GST revenue, predicts Western Australia’s share of the tax will fall next financial year to less than 30¢ for every dollar it collects. The state, which was once awash with cash from the resources boom, would receive just $2 billion out of a forecast total tax take of $57.2 billion.
Mr Hockey has referred the issue to the meeting of the Prime Minister and premiers next Friday and will make a final decision before May, when the federal government and the states’ budgets are due.
Mr Koutsantonis warned Mr Hockey that if he went ahead and unilaterally changed the formula, he would “wreck the federation”.
Mr Hockey agreed with the other states and territories that Western Australia must contribute by reforming its economy, including deregulating its shopping hours, removing anomalies in business practices, and privatising its electricity networks.
STOP BLOCKING PLANS
“WA has consistently opposed the extension of the GST below the $1000 threshold for imports. I got the clear impression, as did others, that the Treasurer of WA accepts that there will need to be some reform in WA to address the concerns of other states that have undertaken that very painful, politically painful reform,” he said.
Before leaving Canberra, West Australian Treasurer Mike Nahan, who ruled out selling the state’s “poles and wires” at an energy policy briefing late last month, told The West Australian newspaper he accepted there needed to be reform and said he would raise it with Premier Colin Barnett
Trading hours have been extended during the state Liberal government’s six-and-a-half years in power, although the issue has traditionally divided political parties, which has led to only modest policy change.
“WA has become a standout in its lack of economic reform,” she said. “If we can achieve these reforms and get a greater share of GST, that’s a good outcome.”
A sale of state-owned Western Power would go part-way to paying off mounting government debt, which is forecast to hit $30.9 billion by 2018.
