The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

30 November 2012

Release of the GST Distribution Review Final Report

Today the final report of the independent GST Distribution Review conducted by the Hon John Brumby, Mr Bruce Carter and the Hon Nick Greiner AC (the Panel) has been released.

The Commonwealth distributes GST revenue through a process called horizontal fiscal equalisation to ensure that all States and Territories can provide broadly equivalent services in areas such as education, health and public transport.

Horizontal fiscal equalisation has been a long-standing principle of the Australian Federation for over a century and it is in the national interest to maintain confidence in this fundamental process. The Government therefore commissioned this Review last year to consider whether the current arrangements for implementing horizontal fiscal equalisation can be improved, in light of the major structural changes shaping the Australian economy both now and into the future.

The Panel has undertaken an extensive consultation process. It has released an issues paper, two interim reports and received submissions from a range of stakeholders including State and Territory Governments, academics and peak lobby groups, on the principle of horizontal fiscal equalisation and other aspects of GST distribution.

Following its wide consultations, the Panel's recommendations have re-affirmed its clear support for this long-standing principal to ensure Australians receive broadly equal services wherever they live in our country.

The Panel have also recommended a series of refinements to the current horizontal fiscal equalisation arrangements which I look forward to discussing with the States and Territories.

The Panel considered the interaction between the Minerals Resource Rent Tax and state mineral royalties and confirms that resource rent taxes are more efficient than royalties. The Panel finds that royalty increases are neither desirable nor sustainable, and makes a series of recommendations to remove the incentive states currently have to raise royalties.

I look forward to discussing the Panel's recommendations with State and Territory Treasurers at the Standing Council on Federal Financial Relations meeting on 17 December 2012, prior to announcing the Commonwealth's position once the Government has given thorough consideration to the complex issues addressed by the Report.

The report provides a comprehensive analysis of many criticisms of horizontal fiscal equalisation which will help broaden community understanding of the system and which will further inform this important national debate. I thank the Panel and secretariat for their hard work and dedication in this complex area.

The Final Report, along with the Review's earlier work and public submissions, can be accessed on the Review website at: www.gstdistributionreview.gov.au.