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October 2009
State submissions in response to the Commonwealth Grants Commission’s 2010 Review Draft Report were provided by end September 2009.
Over the last few years, the Grants Commission has been reviewing the methods it uses to calculate the distribution of GST revenue grants among States. The Commission is due to report on this review by February 2010.
The Grants Commission’s Draft Report contained both positives and negatives for Western Australia.
A major positive is a proposal to radically simplify the Commission’s assessment of States’ infrastructure needs, by replacing the previous unreliable debt charges assessment with a new direct assessment of infrastructure acquisition.
By introducing a reliable assessment of the impact of strong population growth on infrastructure requirements, this proposal would benefit Queensland, Western Australia and the Northern Territory.
This proposal has attracted considerable negative publicity – particularly from the New South Wales Treasurer, who has dubbed Queensland and Western Australia the 'axis of evil' for supporting the proposal. However, the Grants Commission process should fully recognise Western Australia’s spending needs, as it redistributes a large part of our revenues to other States each year. For example, the Grants Commission process is redistributing $2.7 billion (or 17%) of our total 2007 08 revenues (from sources other than the GST).
Another important positive is a proposal for a more comprehensive assessment of State health needs.
Major negatives include:
a proposal to alter the timing of the Commission’s ‘equalisation’ of States’ circumstances, by changing from an average of five years’ data in the calculations to an average of three year’s data in the calculations; and
a proposal to assume that demand for State welfare services is proportional to numbers of recipients of Commonwealth pensions and benefits.
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