Today the first interim report of the independent GST Distribution Review - being 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 to ensure that all States and Territories have the ability to provide broadly equivalent services in areas such as education, health and public transport. As a result, States with strong revenue bases receive relatively less GST revenue.
This process, known as horizontal fiscal equalisation, is an important and long-standing principle of the Australian Federation and will be maintained.
The independent Panel is considering whether the current arrangements for implementing equalisation can be improved, in light of the major structural changes shaping the Australian economy both now and into the future.
The independent Panel is dealing with a complicated and contentious issue and has not made detailed recommendations in its first interim report.
The first interim report outlines the Panel's current thinking on proposals and seeks further submissions from states, territories and other interested parties on the information and concepts outlined in this interim report.
I thank the Panel for their work to date and look forward to receiving a second interim report on issues relating to state taxes and mineral royalties in mid-2012, followed by a final report later in 2012.
After the release of the final report, I will convene a meeting with State and Territory Treasurers to discuss the Panel's recommendations.
While we understand that States and Territories will naturally pursue their individual interests, the Gillard Government will continue to act in the broader national interest to ensure a strong economy and high quality services for all Australians. The report can be accessed on the Review website at www.gstdistributionreview.gov.au