Legislating a fairer way to distribute the GST

Media release
01 Oct 2018
Prime Minister, Treasurer

The Liberal and Nationals Government will legislate a fairer and more sustainable GST deal for everyone.

As the Productivity Commission outlined, the effects of the mining boom created extraordinary volatility in the GST distribution that tested community confidence in the system.

To address these shortcomings we announced our intention to:

  • Introduce a new Horizontal Fiscal Equalisation (HFE) benchmark
  • Introduce a permanent in-system GST relativity floor
  • Provide transitional assistance

All states and territories will be better off under these changes with an additional $9 billion over the next ten years. This is on top of the extra $6.5 billion in GST revenue our government will deliver states and territories to 2021-22 as a result of policy decisions taken since the 2015-16 Budget.

Unfortunately it became clear some states intend to grandstand and play politics on this issue, including in the lead up to this week’s scheduled meeting of the Council on Federal Financial Relations.

We will now introduce legislation that locks these reforms into place, providing the certainty needed for the new GST distribution system. It prevents the system becoming a political football.

The Government is not going to get into running multiple GST arrangements. The new system is fairer and because of the $9 billion over the next ten years in additional contributions by the Federal Government, all states and territories benefit.

These changes are overdue, and it’s time we lock them in. Our government’s position is clear.
Both the Commonwealth Grants Commission Act 1973 and the Federal Financial Relations Act 2009 will be amended, with legislation introduced as a priority.

Our government’s reforms to be legislated will deliver a fairer GST system that leaves every state and territory better off.