Ms FINOCCHIARO - 2012-11-01
Can the Treasurer outline to the House the risks for the Territory to its GST revenue, particularly if GST grows more slowly than Treasury projections?
ANSWER
Madam Speaker, I thank the member for Drysdale for her question. The Northern Territory is heavily reliant on Commonwealth funding and 60% of our revenue comes from GST, with just 20% comprised of tied Commonwealth grants. The GST revenue we receive is extremely important to our survival.
To put this in perspective, other jurisdictions receive around 25% of their income from GST revenues. Any negative variation in GST will put great pressure on the Territory budget, as we have seen over the last four years. Risks to that revenue are several, including the size and composition of our population, our share of the national population, the size of the GST pool and, more significantly, any change to the distribution methodology to divide GST between the states and territories.
This last one, particularly, is critical now. There is a GST Review Panel in place which the former government had negotiations with. The Chief Minister and I have met with different members of the GST Review Panel over the last 10 weeks. It is a highly competitive environment we share. The four large states - Victoria, New South Wales, Queensland and Western Australia - strongly lobbied the review panel to cut the smaller jurisdictions loose, and that includes the GST.
We cannot afford this to happen. I have written to the panel to reaffirm the previous government’s submission to ensure we get our fair share. The static nature we are experiencing in the pool of GST revenue being collected by the Commonwealth is a big risk for us also. As Australians bunker down they are spending less, the GST pool is smaller than it was, and it is not growing.
The point is, the previous government kept spending as if GST revenue would keep growing and rolling on at the pre-global financial crisis rate whereas, in reality, it has changed. The rate of spending increased at a far more rapid rate than the GST was rolling in. GST revenue to the Territory was not growing as fast as it was being spent by the former government, and we know we are in a dire financial situation thanks to it.
ANSWER
Madam Speaker, I thank the member for Drysdale for her question. The Northern Territory is heavily reliant on Commonwealth funding and 60% of our revenue comes from GST, with just 20% comprised of tied Commonwealth grants. The GST revenue we receive is extremely important to our survival.
To put this in perspective, other jurisdictions receive around 25% of their income from GST revenues. Any negative variation in GST will put great pressure on the Territory budget, as we have seen over the last four years. Risks to that revenue are several, including the size and composition of our population, our share of the national population, the size of the GST pool and, more significantly, any change to the distribution methodology to divide GST between the states and territories.
This last one, particularly, is critical now. There is a GST Review Panel in place which the former government had negotiations with. The Chief Minister and I have met with different members of the GST Review Panel over the last 10 weeks. It is a highly competitive environment we share. The four large states - Victoria, New South Wales, Queensland and Western Australia - strongly lobbied the review panel to cut the smaller jurisdictions loose, and that includes the GST.
We cannot afford this to happen. I have written to the panel to reaffirm the previous government’s submission to ensure we get our fair share. The static nature we are experiencing in the pool of GST revenue being collected by the Commonwealth is a big risk for us also. As Australians bunker down they are spending less, the GST pool is smaller than it was, and it is not growing.
The point is, the previous government kept spending as if GST revenue would keep growing and rolling on at the pre-global financial crisis rate whereas, in reality, it has changed. The rate of spending increased at a far more rapid rate than the GST was rolling in. GST revenue to the Territory was not growing as fast as it was being spent by the former government, and we know we are in a dire financial situation thanks to it.
Last updated: 09 Aug 2016