5 July 2018
Transcript - #2018136, 2018

Interview with Natalie Barr, Sunrise

Subjects: All States and Territories better off from a fairer way to share the GST

NATALIE BARR:

Treasurer, Scott Morrison joins me now from Canberra. Good morning to you, Treasurer. How can this new system leave every State and Territory better off?

TREASURER:

Well, it's all about having a bigger pie. At the end of the day, what the Commonwealth will be doing is making sure that after we've collected all the GST revenue we'll add a bit more to that each year and that means that there is more to share around all the States and Territories, which will mean more hospitals, schools, police, and essential infrastructure. The thing is, the system has been broken and all your viewers in Western Australia would know that best of all. I mean, Western Australia was getting down to less than 30 cents in the dollar per person compared to the other States, and about a $1.10 and more in Queensland. So, the system is broken and clearly needs to be fixed and this is a long-term plan to fix it.

BARR:

Yeah as a Western Australian, boy do I know that. So you commissioned a report a year ago. You release it and then ignore it, because you knew all of this, you knew WA's problem a year ago, why didn't you just act a year ago instead of commissioning the report?

TREASURER:

Well, the report actually has more than just this recommendation. We've accepted all the other recommendations in the report. So there's around nine of those recommendations, we've accepted eight of them. What the report has said, what they were preparing said, that's not unambiguously the best option, there are other options, and what we've done is gone with another of those options to fix the problem. But at the end of the day it's about fixing the problem and the independent report by the Productivity Commission found that the system was broken and that it did need to be fixed and we couldn't kick this can down the road. That's been done for 10 years and we are the first government to actually act on this in that time.

BARR:

But why didn't you do it sooner if you already knew?

TREASURER:

Well, we didn't know what the solution needed to be. We needed to do further work on finding out what would the GST share look like over the next eight years. We didn't know that a year ago. The Productivity Commission was able to work that out for us and give us those numbers going out eight years from now so we could work out which was a better option and which was an option that was affordable. The ultimate option they came up with would have been too expensive to implement. And it would have actually gone against the 'fair go' principle where the larger States are still helping out the smaller States. So, we are committed to that, and I know Western Australians are committed to that too. But when you have the mining boom, that just sends the whole formula into melt-down and as a result, we've been able to change it out to seven years in New South Wales and Victoria, and that should bring a lot more stability in the future and a fairer share for everyone.

BARR:

So you have to top up WA, then you have to add almost $7 billion to the GST pool. How can the Federal Government afford this?

TREASURER:

Well, we'll be in surplus in 2019-20 and the cost of this program, particularly over the back end of the next 10 years. I mean, for 10 years the GST pool will be $100 billion a year and at the end of those 10 years we'll be adding around about a billion more into that pool. So look, these are all big numbers, I know, but in the context, this is the only way that you can make sure that the problem for WA is fixed but it's done on a permanent basis. We're putting in a safety net of a floor, so no State can receive less than ultimately 75 cents in the dollar and we think that's fair. New South Wales, Victoria, Western Australia, we've all be in similar territory but it's important for larger States who have bigger economies are able to support the smaller States like Tasmania, South Australia, and the Northern Territory.

BARR:

Treasurer, thanks very much for your time this morning.