DistantNews
Support us
🇦🇺 Australia /Economy & Trade

Architect of current GST system says its 'working exactly as intended'

From ABC Australia · () English

Summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • One of the architects of Australia's 2018 GST deal defends it as working as intended, countering recent criticism from state premiers and a Productivity Commission report.
  • The deal, which ensures Western Australia receives a larger GST share, was designed to address perceived unfairness and support the state's resource-driven economy.
  • State premiers, particularly from South Australia, have labeled the deal a

Mathias Cormann, a key architect of Australia's 2018 Goods and Services Tax (GST) deal, has defended the arrangement, stating it is "working exactly as intended." His comments come amid escalating criticism from state premiers and a recent interim report from the Productivity Commission, which described the deal as a costly mistake and recommended its abolition.

the unbelievable unfairness that Western Australia was on the receiving end of [was] addressed.

— Mathias CormannExplaining the rationale behind the 2018 GST deal changes.

Western Australia's Premier Roger Cook has fiercely defended the deal, labeling the Productivity Commission report's authors as "east-coast clowns." He has also secured assurances from Prime Minister Anthony Albanese that the current arrangements will remain in place. Meanwhile, South Australian Labor Premier Peter Malinauskas has echoed the Productivity Commission's findings, calling the deal a "dud deal" for the rest of the country that requires scrapping.

Cormann, who served as WA's federal finance minister under Scott Morrison, argued that the 2018 changes, including a "relativity floor," were necessary to rectify the "unbelievable unfairness" Western Australia faced due to its mining industry. He asserted that the national economy and budget benefit from WA's resource development, making the federal budget sensitive to iron ore price fluctuations.

the national economy and the national budget benefit from Western Australia, having developed these resources.

— Mathias CormannJustifying the deal's impact on the federal budget.

The 2018 GST deal grants Western Australia a larger share of GST revenue annually than the standard national formula would provide. This formula is intended to ensure states can offer comparable services by allocating more funds to those with greater needs or fewer financial resources. The original formula had become contentious as GST payments to WA decreased while its iron ore royalties surged. The 2018 adjustments, however, led to rising GST payments for WA even as its mining royalties climbed due to high iron ore prices, prompting accusations of unfairness from other states.

Premier Cook can call other people clowns all he likes but it won’t change the independently-verified report that now says it’s a dud deal for the rest of the country.

— Peter MalinauskasCriticizing Western Australia's stance and defending the Productivity Commission's findings.

Cormann maintained that no other state or territory has been financially disadvantaged by the 2018 changes. He expressed belief in the GST's role in supporting equal service delivery nationwide but cautioned against pursuing this goal at the expense of disproportionately taxing WA.

There's got to be an appropriate balance.

— Mathias CormannDescribing the need for equilibrium in GST distribution.
DistantNews Editorial

Originally published by ABC Australia. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

More Stories

From Our Blog