Recommended changes announced today to the Commonwealth Grants Commission (CGC) funding formula will strip $443million from Western Australia's share of GST funding next year.
Premier Colin Barnett said the cut was unfair to West Australian families and businesses.
"Under this proposal, for every dollar West Australians pay in GST they will only be receiving 68 cents back. Meanwhile people in New South Wales will receive a return of 95 cents, Victorians will receive 93 cents and Queenslanders will receive a return of 91 cents," Mr Barnett said.
"It means that every West Australian man, woman and child will be $195 worse off under this proposal.
"The severe cut places pressure on the State's finances and, as a result, our capacity to deliver services in areas like health, education and other social services.
"Why is NSW being rewarded with an additional $277million and Victoria with $223million, when it is resources-driven States like Western Australia and Queensland that are powering Australia's economic recovery?
"While WA has 10.4 per cent of Australia's population, our GST share will fall to 7.1 per cent next year - in other words, for every $3 of GST that West Australians pay, we only get $2 back from Canberra.
"If we received an equal per capita share of the GST, WA would be $1.5billion better off in 2010-11. WA is being short-changed."
Treasurer Troy Buswell said most of the decline in WA's grant share in the CGC's latest report reflects that commission's decision to use an average of three data years, rather than five data years as previously.
This alone costs WA $490million next year (offset by positive impacts of other methodological changes - see table below).
"As this change in methodology costs WA nearly half a billion dollars, I will be demanding that the Treasurer, Wayne Swan, consider phasing in this change over a longer period," Mr Buswell said.
"WA's grant share has also suffered a modest fall due to our continuing strong revenue growth relative to other States, reducing our assessed need for support from Canberra.
"We are pleased that the CGC will now better recognise the impact of WA's strong population growth on our capital works program, albeit belatedly and without compensation for past impacts.
"However, we are concerned the CGC has made an 11th hour change to its treatment of State's mining royalties, which will see even more of WA's royalties sent to other States.
"I am meeting Mr Swan at a Treasurers' meeting in Canberra on March 26 and I will be advocating some fundamental changes to the Grants Commission process.
I would like to see more certainty and predictability about the outcomes; more incentive for States to develop their economies by limiting the penalty for success; reduce distortions to government decision making; and improve the transparency and simplicity of the process and outcomes.
"The redistribution of GST grants through the CGC process is just one part of a much-bigger picture that shows WA providing massive subsidies to the Australian Federation, not all of which can be considered to be in the national interest.
"The latest available data shows WA contributing $8billion more to Commonwealth revenues each year (including company tax, personal income tax and petroleum revenues) than it received back in grants and other expenditure benefits from the Commonwealth."
Premier's office - 9222 9475
Treasurer's office - 9222 9111
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