Abbott and Barnett's $2 billion GST slug for NSW, Queensland and Victoria

New analysis confirms Tony Abbott and Colin Barnett's secret GST redistribution plan will cost the eastern states more than $2 billion in revenue in just two years.

The Government analysis shows that if the proportion of GST distributed to Western Australia was lifted to 75 cents in the dollar - which is what Western Australia advocated for in its submission (p12) to the GST Distribution Review Panel - over two years, the three largest states would lose:

• New South Wales $1.044 billion
• Victoria $813 million
• Queensland $662 million

On Sunday, Mr Abbott said NSW, QLD and Victoria are prepared to work together on a secret plan that will see WA get more GST:

ABBOTT: Colin Barnett as I understand it thinks that it might be possible talking to the Premiers of Queensland, New South Wales and Victoria and himself, to come up with something that doesn't disadvantage the smaller states but which is fairer to the bigger states.

KELLY: In other words that New South Wales and Victoria would be worse off?

ABBOTT: Well, I'm going to leave it in the hands of the state premiers. If they can come to me with something that is a fairer system I am all ears.

PVO: But if you've had a conversation with Colin Barnett as he says that you're open to fixing the system. There is a certain pot of money as Paul Kelly says, there's a certain pot of money so if Northern Territory, South Australia and Tasmania aren't going to be worse off, by definition if WA is going to get more, what he calls a fair share, then it has to be Queensland, New South Wales and Victoria that would be worse off.

ABBOTT: And my understanding is that the premiers of the larger states are prepared to look at some changes.

[AUSTRALIAN AGENDA - SKY TV - 21 APRIL 2012]

And just yesterday, Mr Abbott said he was happy to sit back and let Mr Barnett push his plan:

QUESTION:

On the GST issue, on state finances, you're proposing that the big four states get together and talk about it but you can't convince Tasmania and South Australia to give up some of their GST money. Why do you think Queensland, Victoria and New South Wales will give up any of theirs?

TONY ABBOTT:

Well, this is an issue for the states. It is an issue for the states.
(Doorstop - 22 April 2013)

Assistant Treasurer David said the Abbott-Barnett plan would leave families and small businesses in the eastern states worse off.

"Tony Abbott has given the green light to Colin Barnett to start working on a plan that will rip away more than $2 billion in GST revenue from New South Wales, Victoria and Queensland and redistribute it to Western Australia," said Mr Bradbury.

"Mr Abbott is happy to see people in our eastern states suffer from a multi-billion dollar cut to the services and jobs that they rely on so Tony Abbott can look after his mate Colin Barnett.

"The Premiers of those States need to come out and declare whether they support this extraordinary plan, or whether they will stand up for families and small businesses against the devastating cuts Mr Abbott and Mr Barnett want to inflict.

"Why do they refuse to comment on whether they had secret discussions with Mr Abbott or other Premiers about this plan as Mr Abbott says they have, or are they preparing to?

"Will they fight Tony Abbott's strategy to take money off them to give to Colin Barnett? Why are they strangely silent?

"What's most concerning about today's development is that not only are the smaller states in the firing line under an Abbott Government, he now expects the larger states to hand over their GST into WA Treasury."

The Government commissioned an independent review of GST distribution which found the current system of Horizontal Fiscal Equalisation works well.

Attachment

BACKGROUND - Abbott-Barnett plan to strip more than $2 billion from NSW, Victoria and Queensland
Change to GST distribution

GST distribution if WA relativity set to 0.75 (and taken from NSW, Vic & Qld on an EPC basis)

Note: Due to rounding, individual States do not sum to total