The Victorian Government has criticised as inequitable the  Commonwealth Grants Commission 2012 Update of GST Relativities, and called for reform of the existing formula.

 

Victorian Treasurer Kim Wells said the Updaate will result in Victoria receiving $985.7 million less than the state's per capita share.

 

"Victoria will not be receiving additional GST revenue relative to the amounts factored into the December Budget Update. Victoria's GST revenue has been revised downwards consistently over the last 12 months and today's announcement gives us no respite from that trend," Mr Wells said.

 

"Victoria's revenue loss is highlighted by one simple statistic – in late 2010, the former Government forecast that Victoria would receive $12.6 billion in GST revenue this coming financial year. On the latest estimates, we will receive $11.7 billion. Nearly $1 billion per annum has been wiped off the Victorian budget bottom line due to reduced GST receipts.

 

"Under this flawed and inequitable formula, Victorians will subsidise the rest of Australia to the tune of $171 per person in the 2012-13 year.

 

"For every dollar of GST paid by Victorians, we only get about 92 cents back.

 

"The absurdity of the system is highlighted by Victoria making larger contributions to the rest of the country than a resource-rich State like Queensland. Aside from Western Australia, Victoria is the largest contributor to the rest of the country.

 

"Victoria deserves a fair share of GST. Our submission to the GST Distribution Review pushes for a move towards an equal per capita sharing of GST revenue, and highlights other flaws in the present system including rewarding inefficient delivery of state services.

 

"The 2012 Update comes a year after the Commonwealth decided to strip $2.5 billion of GST revenue from Victoria. This was in addition to an overall shrinking of the GST pool which further eroded Victoria's revenue base.

 

"Since then, the Government has been deliberately conservative in its forecasts of GST revenue. While the 2012 relativity is consistent with the Government's expectations, over the past year we have seen a significant reduction in GST revenue through the combined effect of a flawed distribution formula and weak national consumption," Mr Wells said.