GST proposal is in the national interest

5 July 2018

Today, the Federal Government has announced an eight-year, three-step plan to fix the broken Goods and Services Tax (GST) redistribution process.  The plan responds to the findings of the Productivity Commission’s inquiry into the current horizontal fiscal equalisation (HFE) formula.  

The proposed changes to the distribution of GST will reduce the pressure on State and Territory Budgets and will remove the need to adjust royalties and the indirect taxes, such as stamp duty and payroll tax.

“Today’s proposal should mean no Australian State or Territory is disadvantaged for encouraging the development of the mining and mineral exploration industry,” said Warren Pearce, Chief Executive Officer, Association of Mining and Exploration Companies (AMEC).

“In the past, Western Australia in particular, has been disadvantaged by the GST HFE formula redistributing the sizeable royalty receipts from WA’s world leading mining sector to other States.”

“This announcement provides certainty for State and Territory Governments, certainty on a major budget item, and reduces a substantial disincentive for Governments to encourage the investment in Australia’s mineral resources.”

“Importantly, the Treasurer makes clear that no State of Territory will be worse off under the proposal.”

“As identified by the Productivity Commission report, the eight-year timeframe provides a window for State’s and Territory’s to revisit indirect taxes and look to broader reforms to reduce the cost of doing business.”

“The HFE reform is positive for the sector, and we call on State and Territory Governments to support a more equitable redistribution of the GST in the national interest,” said Mr Pearce.