Budget 2009–10: Federal-state financial relations
GST transitionary assistance to expire
Richard Webb
Under existing arrangements for the payment of GST revenue
to the states, it is possible that some states will be worse off than if the
pre-GST arrangements had continued to apply.
When the Howard Government introduced the GST, it pledged
that no state would be worse off under the new arrangements compared with the
former arrangements. The pledge was that if a state’s GST entitlement was less
than the amount it would have received under the former arrangements—the
guaranteed minimum amount—the Federal government would top up that state’s GST
entitlement with budget balancing assistance. This pledge was initially due to
expire on 30 June 2006. The Howard Government subsequently extended this
transitional period to 30 June 2009.
The strong growth in GST revenue meant that for the period
2004–05 to 2007–08, the Federal government did not have to pay any budget
balancing assistance. However, Budget Paper No. 3 indicates that the Federal
government will have to pay budget balancing assistance of $261 million in 2008–09.[1] But with the pledge to provide budget balancing assistance due to expire on 30
June 2009 and the future level of GST payments uncertain, some states might
receive less GST than their guaranteed minimum amounts in 2009–10 and beyond. Some
states could therefore be worse off than if the pre-GST arrangements had
continued to apply.
[1]. Australian Government, Australia’s
federal relations: budget paper no. 3: 2009–10, Commonwealth of Australia,
Canberra, 2009, p. 116.
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