Government finances spark GST carve up row
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More news: Independent economist Saul Eslake has taken a swing at both sides of federal politics for allowing Western Australia to continue to collect significant a large share of GST revenues.
The budget statements show $31.4 billion in mining royalties will be collected by WA over the four years to 2027-28 and $32.4 billion is expected to be gathered from its share of GST over this time period. Eslake said this is $21.1 billion more than it would have received under a notional equal per capita distribution.
The WA Government is expected to run general government cash surpluses worth $5.8 billion over that period while all other states and territories, and the federal government, are projecting cash deficits.
Western Australian seats have been critical for federal elections, which Eslake said was driving the cash injection. He said both sides of the political aisle are to blame.
What they said: “Today's update shows that the WA Government now expects to run 'general government' cash surpluses totalling $5.8 billion over the four years to 2027-28, $1.8 billion more than envisaged in the 2024-25 Budget presented in May. Every other state and territory is projecting cash deficits in each of those four years, totalling $149 billion, while the Commonwealth is projecting cash deficits totalling $133 billion (according to its MYEFO published last week),” Eslake said in a statement emailed to media.
“This munificence towards Australia's richest state on the part of successive Federal Governments ... allows the WA Government to provide its citizens with better-than-average public services whilst levying on them lower-than-average state taxes and charges - and to run budget surpluses, which have in turn allowed the WA Government to reduce its forecast of 'general government' net debt as at 30 June 2028 by $0.7 billion, to $29.2 billion," he said.
"That represents about 5.25% of forecast gross state product; by contrast, the net debt of the 'eastern' state and territory governments is projected to reach $449 billion (or 19% of their combined GSP) by 30 June 2028.”
Eslake said the change to the basis for carving up revenue from the GST among the states and territories is not in-keeping with the original intent, and the cost “has blown out by more than any other single policy decision so far this century, with the possible exception of the NDIS”.
Government reveals $14 billion deficit in financial year to November
The news: The federal government has run up a $14 billion underlying cash deficit from the start of the 2024-25 financial year to 30 November 2024.
The headline cash balance was -$15.8 billion for the same period. Revenue totalled $288.2 billion, with expenses at $293.7 billion.
The numbers: The fiscal balance for the start of the new financial year to the end of November was a $5.1 billion deficit. In terms of assets and liabilities, net worth was totalled at -$540.1 billion, net debt totalled $514.5 billion and net financial liabilities were $803 billion.
The net operating balance was a $5.5 billion deficit. Receipts totalled $280.5 billion, with payments of $294.5 billion.
The context: The government’s spending and revenue raising is under significant scrutiny following a mid-year economic and fiscal outlook that showed a smaller than expected deficit this year will likely be followed by a larger than anticipated deficit for much of the forward estimates. Economists have been concerned that government spending is adding to inflation and are also raising the need for reform to improve the budget bottom line. However, there has been mixed opinions about whether the government needs to cut back any services, with a significant amount of spending concentrated in health and care.
