❓ WA Treasurer announces independent review of Commonwealth-State financial relations, highlighting concerns about WA subsidising other states and the opaque nature of the grants distribution formula.
AnsweredQoN 616Legislative Assembly
QuestionView source ↗
COMMONWEALTH-STATE FINANCIAL RELATIONS, REFORM
Will the Treasurer inform members what action the Government is taking to reform the Commonwealth-State financial relations? Mr RIPPER
Will the Treasurer inform members what action the Government is taking to reform the Commonwealth-State financial relations? Mr RIPPER
AnswerView source ↗
Last Friday, I met with the Treasurers of New South Wales and Victoria to launch a comprehensive independent review of the Commonwealth-State financial relations. That inquiry is needed urgently because New South Wales, Western Australia and Victoria are subsidising the other States to the tune of $2 billion a year and the subsidy is set to grow to about $3 billion a year by 2005-06. That figure is reached by comparing the amount of goods and services tax revenue that the three States receive compared with the share they would receive on a per capita basis. The situation is even more serious for Western Australia. When the amount of revenue raised by the Commonwealth from this State is compared with the amount of commonwealth expenditure in this State - that is, direct commonwealth expenditure and payments to the States - Western Australia loses $2.7 billion each year. That is the outflow of funds from this State used to subsidise the rest of the Federation and is the largest fiscal subsidy to the rest of the Federation of any State in the country. The Commonwealth Grants Commission administers the distribution of the commonwealth grants using a formula that is rather arcane and mysterious. Only a few specialists know how it works. The Commonwealth Grants Commission is the only body that reviews the formula. We must have a better system. There is no argument against Western Australia supporting weaker States like Tasmania or South Australia, but I draw the line when it is asked to subsidise Queensland, which has a very strong fiscal position and has the capacity to cut taxes that draw investment away from other States. I also draw the line when we are asked to subsidise the Australian Capital Territory where incomes are so much higher than in the rest of the country. We need a better system in this country. Professor Ross Garnaut and Dr Vince Fitzgerald will conduct the independent review. They are eminent people who will present a strong argument for change - I am confident that their conclusions will recommend change. There is no doubt that Western Australian taxpayers suffer a significant cost in providing the roads, ports and water supplies for resources projects. We do not get the full benefit of the royalties from those resources projects. Some 80 per cent to 90 per cent of those royalties are redistributed to the other States. That affects our economic development and it affects the State budget. Resources given to States that receive less return on the investment impacts on national economic development.
Mr RIPPER replied: Last Friday, I met with the Treasurers of New South Wales and Victoria to launch a comprehensive independent review of the Commonwealth-State financial relations. That inquiry is needed urgently because New South Wales, Western Australia and Victoria are subsidising the other States to the tune of $2 billion a year and the subsidy is set to grow to about $3 billion a year by 2005-06. That figure is reached by comparing the amount of goods and services tax revenue that the three States receive compared with the share they would receive on a per capita basis. The situation is even more serious for Western Australia. When the amount of revenue raised by the Commonwealth from this State is compared with the amount of commonwealth expenditure in this State - that is, direct commonwealth expenditure and payments to the States - Western Australia loses $2.7 billion each year. That is the outflow of funds from this State used to subsidise the rest of the Federation and is the largest fiscal subsidy to the rest of the Federation of any State in the country. The Commonwealth Grants Commission administers the distribution of the commonwealth grants using a formula that is rather arcane and mysterious. Only a few specialists know how it works. The Commonwealth Grants Commission is the only body that reviews the formula. We must have a better system. There is no argument against Western Australia supporting weaker States like Tasmania or South Australia, but I draw the line when it is asked to subsidise Queensland, which has a very strong fiscal position and has the capacity to cut taxes that draw investment away from other States. I also draw the line when we are asked to subsidise the Australian Capital Territory where incomes are so much higher than in the rest of the country. We need a better system in this country. Professor Ross Garnaut and Dr Vince Fitzgerald will conduct the independent review. They are eminent people who will present a strong argument for change - I am confident that their conclusions will recommend change. There is no doubt that Western Australian taxpayers suffer a significant cost in providing the roads, ports and water supplies for resources projects. We do not get the full benefit of the royalties from those resources projects. Some 80 per cent to 90 per cent of those royalties are redistributed to the other States. That affects our economic development and it affects the State budget. Resources given to States that receive less return on the investment impacts on national economic development.
Last Friday, I met with the Treasurers of New South Wales and Victoria to launch a comprehensive independent review of the Commonwealth-State financial relations. That inquiry is needed urgently because New South Wales, Western Australia and Victoria are subsidising the other States to the tune of $2 billion a year and the subsidy is set to grow to about $3 billion a year by 2005-06. That figure is reached by comparing the amount of goods and services tax revenue that the three States receive compared with the share they would receive on a per capita basis. The situation is even more serious for Western Australia. When the amount of revenue raised by the Commonwealth from this State is compared with the amount of commonwealth expenditure in this State - that is, direct commonwealth expenditure and payments to the States - Western Australia loses $2.7 billion each year. That is the outflow of funds from this State used to subsidise the rest of the Federation and is the largest fiscal subsidy to the rest of the Federation of any State in the country. The Commonwealth Grants Commission administers the distribution of the commonwealth grants using a formula that is rather arcane and mysterious. Only a few specialists know how it works. The Commonwealth Grants Commission is the only body that reviews the formula. We must have a better system. There is no argument against Western Australia supporting weaker States like Tasmania or South Australia, but I draw the line when it is asked to subsidise Queensland, which has a very strong fiscal position and has the capacity to cut taxes that draw investment away from other States. I also draw the line when we are asked to subsidise the Australian Capital Territory where incomes are so much higher than in the rest of the country. We need a better system in this country. Professor Ross Garnaut and Dr Vince Fitzgerald will conduct the independent review. They are eminent people who will present a strong argument for change - I am confident that their conclusions will recommend change. There is no doubt that Western Australian taxpayers suffer a significant cost in providing the roads, ports and water supplies for resources projects. We do not get the full benefit of the royalties from those resources projects. Some 80 per cent to 90 per cent of those royalties are redistributed to the other States. That affects our economic development and it affects the State budget. Resources given to States that receive less return on the investment impacts on national economic development.
The Commonwealth Grants Commission administers the distribution of the commonwealth grants using a formula that is rather arcane and mysterious. Only a few specialists know how it works. The Commonwealth Grants Commission is the only body that reviews the formula. We must have a better system. There is no argument against Western Australia supporting weaker States like Tasmania or South Australia, but I draw the line when it is asked to subsidise Queensland, which has a very strong fiscal position and has the capacity to cut taxes that draw investment away from other States. I also draw the line when we are asked to subsidise the Australian Capital Territory where incomes are so much higher than in the rest of the country. We need a better system in this country. Professor Ross Garnaut and Dr Vince Fitzgerald will conduct the independent review. They are eminent people who will present a strong argument for change - I am confident that their conclusions will recommend change. There is no doubt that Western Australian taxpayers suffer a significant cost in providing the roads, ports and water supplies for resources projects. We do not get the full benefit of the royalties from those resources projects. Some 80 per cent to 90 per cent of those royalties are redistributed to the other States. That affects our economic development and it affects the State budget. Resources given to States that receive less return on the investment impacts on national economic development.
Mr RIPPER replied: Last Friday, I met with the Treasurers of New South Wales and Victoria to launch a comprehensive independent review of the Commonwealth-State financial relations. That inquiry is needed urgently because New South Wales, Western Australia and Victoria are subsidising the other States to the tune of $2 billion a year and the subsidy is set to grow to about $3 billion a year by 2005-06. That figure is reached by comparing the amount of goods and services tax revenue that the three States receive compared with the share they would receive on a per capita basis. The situation is even more serious for Western Australia. When the amount of revenue raised by the Commonwealth from this State is compared with the amount of commonwealth expenditure in this State - that is, direct commonwealth expenditure and payments to the States - Western Australia loses $2.7 billion each year. That is the outflow of funds from this State used to subsidise the rest of the Federation and is the largest fiscal subsidy to the rest of the Federation of any State in the country. The Commonwealth Grants Commission administers the distribution of the commonwealth grants using a formula that is rather arcane and mysterious. Only a few specialists know how it works. The Commonwealth Grants Commission is the only body that reviews the formula. We must have a better system. There is no argument against Western Australia supporting weaker States like Tasmania or South Australia, but I draw the line when it is asked to subsidise Queensland, which has a very strong fiscal position and has the capacity to cut taxes that draw investment away from other States. I also draw the line when we are asked to subsidise the Australian Capital Territory where incomes are so much higher than in the rest of the country. We need a better system in this country. Professor Ross Garnaut and Dr Vince Fitzgerald will conduct the independent review. They are eminent people who will present a strong argument for change - I am confident that their conclusions will recommend change. There is no doubt that Western Australian taxpayers suffer a significant cost in providing the roads, ports and water supplies for resources projects. We do not get the full benefit of the royalties from those resources projects. Some 80 per cent to 90 per cent of those royalties are redistributed to the other States. That affects our economic development and it affects the State budget. Resources given to States that receive less return on the investment impacts on national economic development.
Last Friday, I met with the Treasurers of New South Wales and Victoria to launch a comprehensive independent review of the Commonwealth-State financial relations. That inquiry is needed urgently because New South Wales, Western Australia and Victoria are subsidising the other States to the tune of $2 billion a year and the subsidy is set to grow to about $3 billion a year by 2005-06. That figure is reached by comparing the amount of goods and services tax revenue that the three States receive compared with the share they would receive on a per capita basis. The situation is even more serious for Western Australia. When the amount of revenue raised by the Commonwealth from this State is compared with the amount of commonwealth expenditure in this State - that is, direct commonwealth expenditure and payments to the States - Western Australia loses $2.7 billion each year. That is the outflow of funds from this State used to subsidise the rest of the Federation and is the largest fiscal subsidy to the rest of the Federation of any State in the country. The Commonwealth Grants Commission administers the distribution of the commonwealth grants using a formula that is rather arcane and mysterious. Only a few specialists know how it works. The Commonwealth Grants Commission is the only body that reviews the formula. We must have a better system. There is no argument against Western Australia supporting weaker States like Tasmania or South Australia, but I draw the line when it is asked to subsidise Queensland, which has a very strong fiscal position and has the capacity to cut taxes that draw investment away from other States. I also draw the line when we are asked to subsidise the Australian Capital Territory where incomes are so much higher than in the rest of the country. We need a better system in this country. Professor Ross Garnaut and Dr Vince Fitzgerald will conduct the independent review. They are eminent people who will present a strong argument for change - I am confident that their conclusions will recommend change. There is no doubt that Western Australian taxpayers suffer a significant cost in providing the roads, ports and water supplies for resources projects. We do not get the full benefit of the royalties from those resources projects. Some 80 per cent to 90 per cent of those royalties are redistributed to the other States. That affects our economic development and it affects the State budget. Resources given to States that receive less return on the investment impacts on national economic development.
The Commonwealth Grants Commission administers the distribution of the commonwealth grants using a formula that is rather arcane and mysterious. Only a few specialists know how it works. The Commonwealth Grants Commission is the only body that reviews the formula. We must have a better system. There is no argument against Western Australia supporting weaker States like Tasmania or South Australia, but I draw the line when it is asked to subsidise Queensland, which has a very strong fiscal position and has the capacity to cut taxes that draw investment away from other States. I also draw the line when we are asked to subsidise the Australian Capital Territory where incomes are so much higher than in the rest of the country. We need a better system in this country. Professor Ross Garnaut and Dr Vince Fitzgerald will conduct the independent review. They are eminent people who will present a strong argument for change - I am confident that their conclusions will recommend change. There is no doubt that Western Australian taxpayers suffer a significant cost in providing the roads, ports and water supplies for resources projects. We do not get the full benefit of the royalties from those resources projects. Some 80 per cent to 90 per cent of those royalties are redistributed to the other States. That affects our economic development and it affects the State budget. Resources given to States that receive less return on the investment impacts on national economic development.
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