Analysis: No-worse-off clause threatens to derail WA’s GST solution

A solution to the decade-long injustice of WA’s GST share is almost within reach.

But politics, on both sides of the fence and across the country, is threatening to, if not derail what’s on the horizon, at least delay it.

This has been brewing since the State and Territory treasurers asked Scott Morrison, then the Federal treasurer, to model the details of his planned GST salve.

Morrison has promised $9 billion extra, all out of Canberra’s coffers, to fix the GST system even if that fix was a long way from what had been proposed by the Productivity Commission.

That solution came with a promise that no State or Territory would be worse off.

But State treasurers, never shy in trying to squeeze more money out of Canberra, wanted to be reassured that this no-worse-off clause was real.

That reassurance never came, delivering the sight yesterday of Liberal and Labor treasurers holding out their hands like a collection of Olivers pleading “please sir, can we have some more”.

While the proposed legislation goes to the technicalities involved in the Government’s plan, the accompanying explanatory memorandum of understanding only goes as far as saying that it “seeks” to leave no State worse off.

There’s a reason for that. If a State economy changed in a measurable way, Canberra might have to pump extra cash into the GST pool to stand by that “no-State-worse-off” promise.

By topping up the GST pool to get every State and Territory on board, the Government has bought into every future GST bunfight. There’s a reason the Productivity Commission recommended against this idea.

Opposition Leader Bill Shorten and his team, always looking for a way to turn the political knife in the Government’s back, are using the argument to parade themselves as some saviours of WA and taxpayers on the East coast. It’s too cute by half.

But then the Government can’t answer why it’s good enough to say no State will be worse off but baulk at putting it into law.

All of which ignores the most important issue — none of this matters until 2021-22 when the allocation system is supposed to start changing.

Between now and then about $2 billion in cash will rain on the WA Budget.

The proposed 70¢ and then 75¢ floor, which the Productivity Commission also recommended against, won’t be seen for at least two elections and many changes in the economy.

All the while, WA voters watch on and wonder.