Published: 11 June 2024

Changing the GST rules to get Tasmania a 'better deal' might just be killing the goose that lays the golden eggs

Undermining the GST system is not in Tasmania's interest, writes Ruth Forrest.

Most people have heard the fable written by Aesop about killing the goose that lays golden eggs.

Perhaps not Treasurer Michael Ferguson?

Continuing to campaign against Tasmania's alleged poor treatment when the GST pool is allocated between states will only undermine a system that has served Tasmania well.

Allocating the GST pool, based on revenue-raising ability and measurable needs, has given Tasmania the opportunity to provide an equivalent level of services as other states. The key word here is "opportunity". The Commonwealth Grants Commission assesses our capacity to raise revenue and to deliver services.

Whether we do is a separate issue.

Spoiler alert we don't.

Our income includes commonwealth specific purpose payments (SPPs). These are considered when assessing our share of the GST pool.

Tasmania's SPPs, as a rule, are slightly higher than what we would receive if allocation was on a per capita basis, but less than if based on our fiscal capacity to deliver services, our relativity factor.

Hence, we get more from the GST pool when SPPs to all states are considered. Campaigning for more grants to be quarantined runs the very real risk of Tasmania ending up with a smaller share of the GST pool. We would miss out on receiving compensation for grants paid to other states which are quarantined.

Our relativity factor is currently about 150 per cent but we end up receiving around 180 per cent, the extra because most SPPs to states aren't quarantined so we get extra to compensate.

Paradoxically the more SPPs, the greater our share of the GST pool.

To portray an issue with the GST pool as a battle between Tasmania and the commonwealth is also a misrepresentation of the system. The commonwealth administers the pool.

If one state gets more, others will receive less. The commonwealth doesn't benefit. It's a zero-sum game involving the states.

It's puerile posturing to pretend to be standing up for Tasmania fighting an unsympathetic commonwealth when the reality is that the commonwealth is trying to ensure all states get their fair share.

Quarantining grants is akin to stealing from the cookie jar before the jar's contents are distributed. It costs other states.

Let's consider the $240m Macquarie Point urban renewal grant in more detail. The agreement, as it was recently signed by the Australian and Tasmanian governments, has no mention of a stadium. It's for urban renewal, a state government responsibility and hence ordinarily considered when assessing Tasmania's share of the GST pool.

Considering the Mac Point grant means future GST is reduced by 98 per cent. We are allowed to keep 2 per cent ($5m) which represents our per capita share. Other states will share $235m to square up.

We need to be able to see things through others' eyes. New South Wales people are probably beastly careless if Tasmania builds a roofed stadium at Mac Point. But what if they had to help pay? Would they forgo $75m being their per capita share of the $235m square-up to help Tasmania get a stadium. I very much doubt it. Mr Ferguson believes they should. Would his NSW counterpart agree? I think not.

Grants for projects with national flow-on effects may be wholly or partly quarantined. Nationally significant events such as the Olympic Games fall into this category. Road grants for the national highways are 50 per cent quarantined.

However, arguing a stadium at Mac Point has similar national significance as an Olympic Games venue in Brisbane, as Liberal senator Jonathon Duniam has done, and as such is equally deserving of a quarantined grant, will further undermine the credibility of the Grants Commission. It's almost a Trumpian fifth columnist strategy.

Then what will we end up with?

A sports rort, as pioneered by the Morrison government perhaps?

Introduce a spreadsheet with colour coded electorates with ministerial veto to replace the current system based on revenue-raising ability and measurable needs of states?

We need to support institutions that have served us well. I thought that's what conservatives would want as well. If Mac Point is deserving of a quarantined grant, perhaps national significance could be invoked as a reason for upgrading the port as a gateway to Antarctica. But clearly not to build a footy ground.

Too much righteous indignation is sounding like the boy who cried wolf once too often and was ignored when it really mattered. Another of Aesop's fables which the Treasurer has possibly forgotten?

Or possibly it's the frustration of being left with the poisoned chalice of having to solve our intractable budgetary problems. For too long we've kicked the can down the road.

Flocks of birds flying overhead between now and budget time in September may well be the chickens returning home to roost in Treasurer Ferguson's office.

The Mercury, 10 Jun 2024

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