The Chamber of Minerals and Energy of Western Australia (CME) has welcomed the Federal Government’s decision to review Australia’s system of horizontal fiscal equalization (HFE).
CME Chief Executive, Reg Howard-Smith, said CME had repeatedly called for reform in this area as the resources sector had identified greater distribution of GST returned to Western Australia as a key issue impacting business.
“Fiscal policy should reward productivity and growth but under the HFE policy, this does not occur,” he said.
“For example, if Western Australia reduced certain royalty rates, it could gain more in GST returns than it loses in royalty revenue, although this would be detrimental to other states.
"By providing equitable government service delivery in every state, regardless of local economy and workforce participation, the HFE policy provides no incentive for people to move to areas of economic growth or for governments to enact policies to attract investment and encourage growth.
“This is a key concern for Western Australia’s resource sector.”
Mr Howard-Smith said in reviewing the GST distribution, the inquiry needed to take a “bigger picture” approach to ensure equitable distribution also occurs through the National Partnership Payments and Specific Purpose Payments.
He said CME and its members would continue to work with the federal and state governments as well as the resources sector to reform the GST system to create an environment in order to attract investment and encourage economic growth.
contact: Rosalie Cobai
phone: 0437 156 127