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Scott Morrison Is Getting Between All The Premiers And A Bucket Of Money

The carve up of Australia's GST pie is being reviewed.
Treasurer Scott Morrison has thanked WA colleagues like Finance Minister Mathias Cormann for pressing the state's case.
Andrew Meares/Fairfax
Treasurer Scott Morrison has thanked WA colleagues like Finance Minister Mathias Cormann for pressing the state's case.

CANBERRA – As Paul Keating once said, "Never get between a premier and a bucket of money."

Just as he puts the final tweaks to next week's Federal Budget, federal Treasurer Scott Morrison is stirring up a hornet's nest in succumbing to West Australian Coalition pressure and moving to review the way GST revenue is carved up in Australia.

.@TKoutsantonisMP: @TurnbullMalcolm is governing 'like a pale imitation of @TonyAbbottMHR' #auspol MORE:

— Sky News Australia (@SkyNewsAust) May 1, 2017

And so the states and territories are lining up to fight Canberra yet again after the Treasurer moved to engage the Productivity Commission to look at the impact on the national economy of what is known as horizontal fiscal equalisation (HFE), the GST distribution formula.

South Australia slammed the review as being sprung on the states and territories, Tasmania has vowed to fight "tooth and nail", the Northern Territory said it could not afford any more cuts, while Queensland accused the Turnbull Government in trying to "cosy" up to Pauline Hanson's One Nation party in possibility copying its policy to give the WA more a bigger slice of GST.

It has forced Morrison to promise 24 hours later that he will take a "national" point of view on any changes.

"There are a lot of parochial points of view in this debate," he told the ABC's AM program. "As the Commonwealth Treasurer I have got to take the national point of view.

"What this inquiry is doing is looking at what are the productivity impacts of the way we calculate the distribution of GST?

"How does this affect capital and labour moving between states? What does this mean for what states are doing with their own policies and programs to boost productivity, whether it is in WA or indeed my own home states of New South Wales?"

The 10 percent of GST paid on goods and services in Australia raises around $57 billion a year.

But with the mining boom dissipating, Western Australian state and federal politicians like Mathias Cormann, Christian Porter and Julie Bishop have been arguing that the state needs a bigger slice of the GST pie than the current 34 cents for every dollar raised. That's $2.35 billion in GST revenue.

Under the current model, NSW currently receives $17.6 billion, Queensland gets $14.9 billion, and Victoria cashed in $14.8 billion. SA gets $6.36 billion, while Tasmania just beats WA at $3.4 million.

The recently elected Labor WA state government has described the state's finances as "the worst it has been since the Great Depression" and revealed that debt is now expected to reach $42.3 billion by 2020.

Morrison said any findings will be worked through with state and territory treasurers. He insists states which currently get a larger GST return, like NSW, are also sometimes disadvantaged.

"I know they have had frustrations for some time," Morrison said.

"We need to know the answer to the question: Is this negatively or positively impacting our national productivity?"

"The Commission is not going to recommend any changes to the formula. That is not their job. That is the job of the Commonwealth Grants Commission."

Whatever the recommendations, they is not going to turn around the results of the last West Australian state election, but it might save a few Coalition seats at the next federal poll -- an electoral enterprise already looking like an uphill battle for the Turnbull Government.

There is time though. The Productivity Commission is due to report to Government by 31 January 2018.

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