Commonwealth Grants Commission; GST – Doorstop Interview, Parliament House, Canberra

2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998
$20 Million for Clubs in New South Wales
March 25, 2004
Release Of Discussion Paper on Income Tax Self Assessment
March 29, 2004
$20 Million for Clubs in New South Wales
March 25, 2004
Release Of Discussion Paper on Income Tax Self Assessment
March 29, 2004

Commonwealth Grants Commission; GST – Doorstop Interview, Parliament House, Canberra


Doorstop Interview

Ministerial Entrance

Parliament House, Canberra

Friday, 26 March 2004

9.15 am

SUBJECTS: Commonwealth Grants Commission; GST


Well, today at the Commonwealth State Ministerial Council and Financial relations,

all of the GST, every last dollar of GST revenue, will be distributed to the

six states and the two territories, that is $34 billion, and between them, the

states and the territories will be $1 billion better off, than they would have

been if we hadn’t reformed the tax system. So, they get $34 billion in

total, plus $1 billion windfall, and the Commonwealth will be asking the States

to use that windfall to continue to abolish the taxes that we have earmarked

for abolition starting with the Bank Accounts Debits Tax which we want abolished

in every State and every Territory by 1 July. The States have a very large windfall,

and that windfall ought to be used to reduce the tax burden on Australians.


So far it seems the South Australian Treasurer is the only one who is sort

of satisfied with his allocation, with his State’s allocation, what do

you make of that?


Well, the GST revenue which is paid to the six States and the two Territories

is $34 billion, the States fight amongst themselves of their shares of that,

but overall they are doing very well, $34 billion and a $1 billion windfall.

And they will fight between themselves as to who should get more and who should

get less, but from the overall point of view, they are $34 billion in the black

from the GST.


Is there any case for a review of the Commonwealth Grants Commission formula,

or do you think the system is fair as it is?


Look, we have a Commonwealth Grants Commission which looks at this, and tries

to do justice between the States. We follow the decision of the Commonwealth

Grants Commission. If the States agree on a new methodology, we wouldn’t

stand in their way. But you would have to get the agreement of all the States.


Michael Egan says he wants the funding to actually be distributed on a per

capita basis, is that too simplistic?


Well, if funding were distributed on a per capita basis, people in Tasmania,

Western Australia, Queensland, South Australia, the Northern Territory would

all lose out. And New South Wales would do better. The question is, do you think

there should be some fairness to all Australians, or do you think that some

Australians should do better. From our point of view, we have an independent

commission that looks at all of these issues, and we follow its decision. But

if the States can agree on alternative distribution, we would be very happy

to look at it.


Treasurer, the Reserve Bank’s review of the financial stability yesterday,

do you share their concerns of the danger posed by household debt and house



Well, what the Reserve Bank found yesterday was that the Australian financial

system is very stable, exceptionally stable, led by very profitable banks. There

is no risk to financial stability in Australia, but the point is this, that

as interest rates have come down and people have borrowed more, as you would

expect with lower interest rates, their debts have gone up, which have been

matched by rising house prices. And the Reserve Bank says, that you wouldn’t

want to have the kind of interest rate levels we had in the 1980s in Australia,

you wouldn’t like to have the unemployment rate that we had in the late

1980s early 1990s, because that could do a lot of damage, and I agree with that.

That is why it is so important that we avoid the kind of high interest rate,

high unemployment regime that Labor had in the late eighties and early nineties.


Treasurer, how would you describe the environment at the moment for businesses

in terms of their sales?


Well, their profit share to the Australian economy is higher than it has ever

been. There is strong consumer confidence, so it is a good time to be in business.