NSW: NSW and VIC business groups call for GST change

AAP General News (Australia)
04-30-2006
NSW: NSW and VIC business groups call for GST change

SYDNEY, April 30 AAP - Major business groups in NSW and Victoria have called on the
federal government to stop its "childlike squabbling" and change the distribution of GST
revenues.

Victoria and NSW account for 57 per cent of the national economy but get a proportionally
smaller slice of the GST pie.

Angered by the "inequality and unfairness" of the GST carve-up, business groups from
both states have presented the prime minister's office with a paper containing comprehensive
recommendations for change.

Among the recommendations is a request for a government review of the current GST formula
with a view to simplifying the way distribution is calculated.

They also recommended the Productivity Commission be given the green light to identify
distortions and areas of inefficiency.

"We have to move beyond childlike squabbling about what is fair to developing a system
that is simple, transparent and efficient," ABL State Chamber chief executive Mark Bethwaite
said.

Victorian Employers Chamber of Commerce and Industry (VECCI) chief executive Neil Coulson
said there was little business confidence that GST distributions were consistent with
lifting the performance of government.

"The GST formula is based on nearly 400 separate variables," he said.

"You know there is something wrong when public servants are counting the number of
bus stops throughout the nation and using that figure to help determine how to divide
$37 billion in GST revenues."

The paper, presented to the government on Friday, provided a framework that protected
the principle of horizontal fiscal equalisation, he said.

"At the same time, (it) ensures that the GST is distributed in a way that is in keeping
with the economic goals of Australia," Mr Coulson said.

The paper also recommended the government provide transition payments to states and
territories disadvantaged from the changes.

"No federal government, of any political persuasion, wants to alter a system which
in the short term could have a significant impact on state budgets," Mr Bethwaite said.

"It makes sense to provide competition style payments to those states who might be
disadvantaged so that they have sufficient time to adjust to any change.

"If additional short-term financial assistance is needed by the states to make this
transition, then it should be provided."

In addition, VECCI, ABL State Chamber, the Hunter Business Chamber and Illawarra Business
Chamber have requested a meeting with Labor leader Kim Beazley and Opposition treasury
spokesman Wayne Swan to discuss the distribution of GST revenues.

AAP tr/arb/nf

KEYWORD: GST

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