GST revenue distribution review commissioned
The Federal Government has commissioned a review of the distribution of revenue from the Goods and Services Tax to the States and Territories.
Nick Greiner, John Brumby and Bruce Carter have been appointed to conduct the review.
The Government says that instead of States facing penalties for economic growth and rewards for economic underperformance, the GST distribution process should encourage economic reform and better delivery of services, and provide States with certainty.
At present, there are a number of elements of the distribution arrangements that could be improved.
Under the current arrangements, there is:
- Not enough incentive for reform – currently underperformance in service delivery and economic growth can be rewarded. As far as possible, States should not be put in the position where they can be penalised for investing in economic growth and improved service delivery.
- A need for more certainty and predictability – currentlyStates can be hit with unexpected shocks to their finances.
- The potential for greater simplicity– current arrangements are complex and accordingly not very transparent.
The Review will be advised by a Heads of Treasuries Advisory Committee comprising representatives from all States and Territories, and will seek submissions from the public. It will be supported by a secretariat within the Commonwealth Treasury, with representation from the States and Territories as well as other agencies as appropriate.
The Review will provide an interim report to the Treasurer by February 2012 and a final report by September 2012.
The Commonwealth Grants Commission will continue to serve as the independent umpire and make recommendations on the distribution of GST revenue.
The Federal Government will request the CGC to update its methodology to reflect any agreed recommendations from the Review.
The Review will not affect the distribution of the GST revenue in 2011-12 or 2012-13.