Statement by Mr Greg Smith, Chairperson of the Commonwealth Grants Commission
The Commonwealth Grants Commission (the Commission) is an independent statutory authority that provides advice to the Australian Treasurer on how to distribute GST revenue among the States and Territories. Under terms of reference issued by the then Treasurer on 29 November 2016, the Commission is engaged in a review of all its methods for assessing the relative fiscal capacities of the States and Territories (the States), which will inform its GST sharing recommendations from 2020-21.
Consistent with its terms of reference, the Commission consults regularly with the Commonwealth and the States as it reviews its methods. As part of this process, on 15 November 2018, Commission staff released a consultation paper seeking State views by 25 January 2019 on options for how the Commission might assess State mining royalties revenue. The paper considers a number of approaches identified by the Productivity Commission (PC) in its final report on its inquiry into HFE. Following usual practice, the consultation paper is available on the Commission’s web site.
These papers are discussion papers intended to ensure State views are fully considered by the Commission before it makes any decisions on assessment methods.
The Commonwealth’s Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Act 2018, passed earlier this month, places floors under the amount of equalisation revenue to be received by Western Australia from 2019-20, below which its payments cannot fall. Nothing that the Grants Commission does will result in any reduction in Commonwealth general revenue payments to WA below the level of those specified floors.
It is regrettable then that the WA Treasurer has responded in the WA Parliament to the discussion paper in the following terms:
‘The Commonwealth Grants Commission is going to do all it can to unwind this political solution that has been resolved between the State and Federal governments...’
The Commission prides itself on its impartiality and in the transparency of its processes, and rejects any suggestion that it is acting improperly and attempting to unwind the provisions of the recent legislation.
Western Australia’s views, along with those of all other States and Territories, will be fully considered by the Commission in its ongoing work on the 2020 Review of Methods.