❓ A WA parliamentary question examines the impact of royalty income on Commonwealth grants to WA, revealing significant reductions in GST revenue due to the Commonwealth Grants Commission's distribution process.
AnsweredQoN 19Legislative Council
Asked
10 November 2008
Member
Portfolio
parliamentary secretary representing the Treasurer
QuestionView source ↗
COMMONWEALTH GOVERNMENT GRANTS — ROYALTY INCOME
I refer to the $2.715 billion royalty income projected for the Western Australian government for 2008-09 in the Department of Treasury and Finance documents entitled, respectively, “2008-09 Pre-Election Financial Projections Statement” and “Monthly Report of General Government Finances: Statement for the Month Ended 31 August 2008”. (1) What is the Treasurer’s best available estimate of the reduction in commonwealth government grants to the Western Australian government as a consequence of the royalty income to be received by the Western Australian government in 2008-09? (2) What is the Treasurer’s best available estimate of the impact of this reduction on the revenue to be received by the Western Australian government in each of the years 2008-09, 2009-10, 2010-11 and 2011-12? Hon BARRY HOUSE
I refer to the $2.715 billion royalty income projected for the Western Australian government for 2008-09 in the Department of Treasury and Finance documents entitled, respectively, “2008-09 Pre-Election Financial Projections Statement” and “Monthly Report of General Government Finances: Statement for the Month Ended 31 August 2008”. (1) What is the Treasurer’s best available estimate of the reduction in commonwealth government grants to the Western Australian government as a consequence of the royalty income to be received by the Western Australian government in 2008-09? (2) What is the Treasurer’s best available estimate of the impact of this reduction on the revenue to be received by the Western Australian government in each of the years 2008-09, 2009-10, 2010-11 and 2011-12? Hon BARRY HOUSE
AnswerView source ↗
(1)-(2) The Commonwealth Grants Commission process for the distribution of the national pool of GST revenues among the states effectively ensures an equal per capita distribution among the states of all mining royalties nationally, collected from national average royalty rates. As a result, the Department of Treasury and Finance estimates that Western Australia will effectively lose around 60 per cent, or $1.6 billion, of the estimated on-shore royalties of $2.175 billion in 2008-09 through reductions in the state’s share of GST grants; the loss is about 90 per cent for North West Shelf royalties. This loss is measured in 2008-09 net present value terms. The actual losses occur with a time lag, because the Commonwealth Grants Commission’s assessments are based on a rolling average of data over a five-year period. For example, GST grants in 2008-09 reflect average state circumstances for the period 2002-03 to 2006-07. The estimated GST reductions due to 2008-09 royalties are approximately $360 million for 2010-11; $380 million for 2011-12; $400 million for 2012-13; $430 million for 2013-14; and $450 million for 2014-15. This comes to a total of $2 020 million. The annual grant reductions grow over the five-year period, as they are escalated for growth in the GST pool as well as growth in Western Australia’s share of the population.
(1) What is the Treasurer’s best available estimate of the reduction in commonwealth government grants to the Western Australian government as a consequence of the royalty income to be received by the Western Australian government in 2008-09? (2) What is the Treasurer’s best available estimate of the impact of this reduction on the revenue to be received by the Western Australian government in each of the years 2008-09, 2009-10, 2010-11 and 2011-12? Hon BARRY HOUSE replied: (1)-(2) The Commonwealth Grants Commission process for the distribution of the national pool of GST revenues among the states effectively ensures an equal per capita distribution among the states of all mining royalties nationally, collected from national average royalty rates. As a result, the Department of Treasury and Finance estimates that Western Australia will effectively lose around 60 per cent, or $1.6 billion, of the estimated on-shore royalties of $2.175 billion in 2008-09 through reductions in the state’s share of GST grants; the loss is about 90 per cent for North West Shelf royalties. This loss is measured in 2008-09 net present value terms. The actual losses occur with a time lag, because the Commonwealth Grants Commission’s assessments are based on a rolling average of data over a five-year period. For example, GST grants in 2008-09 reflect average state circumstances for the period 2002-03 to 2006-07. The estimated GST reductions due to 2008-09 royalties are approximately $360 million for 2010-11; $380 million for 2011-12; $400 million for 2012-13; $430 million for 2013-14; and $450 million for 2014-15. This comes to a total of $2 020 million. The annual grant reductions grow over the five-year period, as they are escalated for growth in the GST pool as well as growth in Western Australia’s share of the population.
(2) What is the Treasurer’s best available estimate of the impact of this reduction on the revenue to be received by the Western Australian government in each of the years 2008-09, 2009-10, 2010-11 and 2011-12? Hon BARRY HOUSE replied: (1)-(2) The Commonwealth Grants Commission process for the distribution of the national pool of GST revenues among the states effectively ensures an equal per capita distribution among the states of all mining royalties nationally, collected from national average royalty rates. As a result, the Department of Treasury and Finance estimates that Western Australia will effectively lose around 60 per cent, or $1.6 billion, of the estimated on-shore royalties of $2.175 billion in 2008-09 through reductions in the state’s share of GST grants; the loss is about 90 per cent for North West Shelf royalties. This loss is measured in 2008-09 net present value terms. The actual losses occur with a time lag, because the Commonwealth Grants Commission’s assessments are based on a rolling average of data over a five-year period. For example, GST grants in 2008-09 reflect average state circumstances for the period 2002-03 to 2006-07. The estimated GST reductions due to 2008-09 royalties are approximately $360 million for 2010-11; $380 million for 2011-12; $400 million for 2012-13; $430 million for 2013-14; and $450 million for 2014-15. This comes to a total of $2 020 million. The annual grant reductions grow over the five-year period, as they are escalated for growth in the GST pool as well as growth in Western Australia’s share of the population.
Hon BARRY HOUSE replied: (1)-(2) The Commonwealth Grants Commission process for the distribution of the national pool of GST revenues among the states effectively ensures an equal per capita distribution among the states of all mining royalties nationally, collected from national average royalty rates. As a result, the Department of Treasury and Finance estimates that Western Australia will effectively lose around 60 per cent, or $1.6 billion, of the estimated on-shore royalties of $2.175 billion in 2008-09 through reductions in the state’s share of GST grants; the loss is about 90 per cent for North West Shelf royalties. This loss is measured in 2008-09 net present value terms. The actual losses occur with a time lag, because the Commonwealth Grants Commission’s assessments are based on a rolling average of data over a five-year period. For example, GST grants in 2008-09 reflect average state circumstances for the period 2002-03 to 2006-07. The estimated GST reductions due to 2008-09 royalties are approximately $360 million for 2010-11; $380 million for 2011-12; $400 million for 2012-13; $430 million for 2013-14; and $450 million for 2014-15. This comes to a total of $2 020 million. The annual grant reductions grow over the five-year period, as they are escalated for growth in the GST pool as well as growth in Western Australia’s share of the population.
(1)-(2) The Commonwealth Grants Commission process for the distribution of the national pool of GST revenues among the states effectively ensures an equal per capita distribution among the states of all mining royalties nationally, collected from national average royalty rates. As a result, the Department of Treasury and Finance estimates that Western Australia will effectively lose around 60 per cent, or $1.6 billion, of the estimated on-shore royalties of $2.175 billion in 2008-09 through reductions in the state’s share of GST grants; the loss is about 90 per cent for North West Shelf royalties. This loss is measured in 2008-09 net present value terms. The actual losses occur with a time lag, because the Commonwealth Grants Commission’s assessments are based on a rolling average of data over a five-year period. For example, GST grants in 2008-09 reflect average state circumstances for the period 2002-03 to 2006-07. The estimated GST reductions due to 2008-09 royalties are approximately $360 million for 2010-11; $380 million for 2011-12; $400 million for 2012-13; $430 million for 2013-14; and $450 million for 2014-15. This comes to a total of $2 020 million. The annual grant reductions grow over the five-year period, as they are escalated for growth in the GST pool as well as growth in Western Australia’s share of the population.
(1) What is the Treasurer’s best available estimate of the reduction in commonwealth government grants to the Western Australian government as a consequence of the royalty income to be received by the Western Australian government in 2008-09? (2) What is the Treasurer’s best available estimate of the impact of this reduction on the revenue to be received by the Western Australian government in each of the years 2008-09, 2009-10, 2010-11 and 2011-12? Hon BARRY HOUSE replied: (1)-(2) The Commonwealth Grants Commission process for the distribution of the national pool of GST revenues among the states effectively ensures an equal per capita distribution among the states of all mining royalties nationally, collected from national average royalty rates. As a result, the Department of Treasury and Finance estimates that Western Australia will effectively lose around 60 per cent, or $1.6 billion, of the estimated on-shore royalties of $2.175 billion in 2008-09 through reductions in the state’s share of GST grants; the loss is about 90 per cent for North West Shelf royalties. This loss is measured in 2008-09 net present value terms. The actual losses occur with a time lag, because the Commonwealth Grants Commission’s assessments are based on a rolling average of data over a five-year period. For example, GST grants in 2008-09 reflect average state circumstances for the period 2002-03 to 2006-07. The estimated GST reductions due to 2008-09 royalties are approximately $360 million for 2010-11; $380 million for 2011-12; $400 million for 2012-13; $430 million for 2013-14; and $450 million for 2014-15. This comes to a total of $2 020 million. The annual grant reductions grow over the five-year period, as they are escalated for growth in the GST pool as well as growth in Western Australia’s share of the population.
(2) What is the Treasurer’s best available estimate of the impact of this reduction on the revenue to be received by the Western Australian government in each of the years 2008-09, 2009-10, 2010-11 and 2011-12? Hon BARRY HOUSE replied: (1)-(2) The Commonwealth Grants Commission process for the distribution of the national pool of GST revenues among the states effectively ensures an equal per capita distribution among the states of all mining royalties nationally, collected from national average royalty rates. As a result, the Department of Treasury and Finance estimates that Western Australia will effectively lose around 60 per cent, or $1.6 billion, of the estimated on-shore royalties of $2.175 billion in 2008-09 through reductions in the state’s share of GST grants; the loss is about 90 per cent for North West Shelf royalties. This loss is measured in 2008-09 net present value terms. The actual losses occur with a time lag, because the Commonwealth Grants Commission’s assessments are based on a rolling average of data over a five-year period. For example, GST grants in 2008-09 reflect average state circumstances for the period 2002-03 to 2006-07. The estimated GST reductions due to 2008-09 royalties are approximately $360 million for 2010-11; $380 million for 2011-12; $400 million for 2012-13; $430 million for 2013-14; and $450 million for 2014-15. This comes to a total of $2 020 million. The annual grant reductions grow over the five-year period, as they are escalated for growth in the GST pool as well as growth in Western Australia’s share of the population.
Hon BARRY HOUSE replied: (1)-(2) The Commonwealth Grants Commission process for the distribution of the national pool of GST revenues among the states effectively ensures an equal per capita distribution among the states of all mining royalties nationally, collected from national average royalty rates. As a result, the Department of Treasury and Finance estimates that Western Australia will effectively lose around 60 per cent, or $1.6 billion, of the estimated on-shore royalties of $2.175 billion in 2008-09 through reductions in the state’s share of GST grants; the loss is about 90 per cent for North West Shelf royalties. This loss is measured in 2008-09 net present value terms. The actual losses occur with a time lag, because the Commonwealth Grants Commission’s assessments are based on a rolling average of data over a five-year period. For example, GST grants in 2008-09 reflect average state circumstances for the period 2002-03 to 2006-07. The estimated GST reductions due to 2008-09 royalties are approximately $360 million for 2010-11; $380 million for 2011-12; $400 million for 2012-13; $430 million for 2013-14; and $450 million for 2014-15. This comes to a total of $2 020 million. The annual grant reductions grow over the five-year period, as they are escalated for growth in the GST pool as well as growth in Western Australia’s share of the population.
(1)-(2) The Commonwealth Grants Commission process for the distribution of the national pool of GST revenues among the states effectively ensures an equal per capita distribution among the states of all mining royalties nationally, collected from national average royalty rates. As a result, the Department of Treasury and Finance estimates that Western Australia will effectively lose around 60 per cent, or $1.6 billion, of the estimated on-shore royalties of $2.175 billion in 2008-09 through reductions in the state’s share of GST grants; the loss is about 90 per cent for North West Shelf royalties. This loss is measured in 2008-09 net present value terms. The actual losses occur with a time lag, because the Commonwealth Grants Commission’s assessments are based on a rolling average of data over a five-year period. For example, GST grants in 2008-09 reflect average state circumstances for the period 2002-03 to 2006-07. The estimated GST reductions due to 2008-09 royalties are approximately $360 million for 2010-11; $380 million for 2011-12; $400 million for 2012-13; $430 million for 2013-14; and $450 million for 2014-15. This comes to a total of $2 020 million. The annual grant reductions grow over the five-year period, as they are escalated for growth in the GST pool as well as growth in Western Australia’s share of the population.
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