WA pushes for 25 per cent discount to mining revenue in GST review

The West Australian government wants a 25 per cent discount applied to mining revenue when GST payments to states are being calculated.

The request was included in the government’s 124-page submission to the high stakes Productivity Commission review into the 2018 changes to the GST system, which lifted WA’s share of the tax from 30 cents in the dollar to 75 cents and has since poured billions into state coffers at the same time iron ore royalties skyrocketed.

The submission repeated the public arguments of WA Treasurer Rita Saffioti and Premier Roger Cook over the fairness of the tax, and that WA needed the money to invest in economy boosting infrastructure that supported the national economy.

The submission argued that even with a 75 cents in the dollar floor, WA’s GST subsidy was $2.5 billion – the largest of any state or territory.

“The state government accepts that, as an economically successful state, Western Australia has a role to play in supporting the smaller states. The question at hand is the extent of this support,” the report said.

It argued the prior system resulted in many perverse outcomes like 90 per cent of WA’s iron ore, lithium and nickel royalties being redistributed to other states.

I also argued the blowouts of the ‘no worse off guarantee’ – which costs the Commonwealth billions every year in top up grants to other states to ensure none are worse off than they would have been under the old system – has been covered by other Commonwealth revenue boosts as a result of the high iron ore price.

“We estimate that the benefit to the Commonwealth Budget through increased company tax revenue alone is three to four times greater than the increased cost of the NWOG,” it said.

A key ask from the WA government beyond keeping the 2018 reforms was for the Commonwealth Grants Commission to apply a 25 per cent discount to its assessment of state mining revenue, like iron ore royalties.

WA argued this change would better incentivise other states to grow their mining industries and remove the need for the no worse off guarantee by the end of the decade.

“WA’s message to the Productivity Commission is clear, and it’s united – keep the GST share fair and don’t put the brakes on the national economy,” Saffioti said.

The submission was accompanied by a government-organised “people’s submission” which drew together responses to a survey of WA residents.

Both major parties, Prime Minister Anthony Albanese and Treasurer Jim Chalmers have pledged no changes to the 2018 deal.

The Productivity Commission will release its interim report in August.

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