Western Australians will lose up to $6billion over five years under the Commonwealth Grants Commission funding update announced today, Treasurer Eric Ripper said.
Mr Ripper said WA would pay a heavy price for its economic success, with new figures showing the State’s share of the GST will be cut to record low levels.
The Treasurer said the funding levels, announced today by the commission, were expected to slash WA’s share of the GST to 5.8 per cent by 2011-12 - just over half the State’s share of the national population of 10.2 per cent.
“I have been warning repeatedly for some time that we needed to be aware that our State would pay a price for our financial success - and so it has proved,” he said.
“The Grants Commission has recommended a $350million cut in WA’s share of GST revenue in 2008-09.
“But if this trend continues as expected, by 2011-12 we will lose $2.3billion, compared with our 2006-07 allocation - a total of $6.1billion in that five-year period.
“That is the equivalent of almost four Perth-to-Mandurah railway lines, more than five new football stadiums or about 12 new museums.”
Mr Ripper said the reduction was the largest ever in per capita terms for any State and WA’s GST grant share would now be the lowest of any State or Territory relative to its population.
“After allowing for all the taxes and other revenues the Commonwealth collects in WA and what it puts back into the State, we were already making a net contribution to the nation of about $5billion in 2005-06,” the Treasurer said.
“This figure, of course, will now be much higher.
“There needs to be a greater appreciation of the immense cost pressures we are now facing in WA.
“Our wages bill, for example, is going to be more than $2billion higher than in the last Budget on the basis of EBAs already concluded or offers already made.
“The Australian dollar is currently trading about three cents higher than the 90 cents assumption in our mid-year review.
“That means we could lose a further $400million over the four-year forward estimates period.”
Mr Ripper said he had taken the fight up to the previous Howard Government on the issue and would address the matter further when the Grants Commission visited WA in June.
Under the Grants Commission process, States receive less in GST payments as their revenue capacity increases.
Treasurer's Office - 9222 8788