The Productivity Commission has found that the 2018 GST reforms are failing on efficiency, effectiveness and fairness, while Western Australia continues to benefit from billions in funding. 

Under the Orwellianly-titled Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Act 2018 – the legislation which instituted the changes to the long-standing principles governing the distribution of the revenue from the GST among the states and territories – the Productivity Commission is required to report, before the end of this year, whether those changes are working “efficiently, effectively, and as intended”.

On 14th August, the Productivity Commission published its Interim Report in response to that requirement. The Productivity Commission’s assessment was unequivocal and unambiguous: the changes instituted in 2018 “are not operating efficiently, effectively or as intended” (p. 36 of the Interim Report)

Specifically, the Commission says the 2018 changes have:

reduced the level of horizontal fiscal equalization achieved in Australia;

introduced perverse outcomes to the GST distribution system;

come at a significantly higher cost to the Australian Government than expected

had mixed impacts on states’ fiscal positions – with Western Australia being better off, and other states no worse off – while creating additional fiscal uncertainty for governments; and

increased the complexity of the GST distribution system, making it less transparent.

The Commission points out that the $6.4 billion which the 2018 changes cost the Federal Government in 2024-25 could instead have paid for a $450 tax cut for each Australian taxpayer, or (alternatively) an increase in JobSeeker payments to 90 per cent of the age pension.

In particular, it is not........

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