Monday, Jun 16, 2008 at 06:37
Nomadic Navara,
I think your comments are ill informed.
To say that Qld & WA are getting more than their fair of GST revenue is incorrect and an unsubstantiated blanket comment. The fact is an independent authority – the Commonwealth Grants Commission (CGC) was set up for this purpose – so that it is at arms length from the Government in power of the day. All State Treasuries put in submissions covering all aspects of State expenditure to state their case before the CGC. The CGC uses a complex mathematical formulae to determine the per capita relativities of each state taking into account the states capacity to raise revenue and its cost of providing a standardised level of
services. The aim is horizontal fiscal equalisation.
Here is a summary of the CGC’s role from its web page:
The Commission provides advice on per capita relativities to be used in distributing the
pool of GST revenue and Health Care grants (HCGs) among the States. It is asked to
recommend a distribution that provides all States with the capacity to provide the same
standard of
services without having to raise taxes at different rates, provided they
operate with equal efficiency; that is, to achieve horizontal fiscal equalisation.
2 The Commission calculates the relativities using data for the most recent five completed
financial years (for example, 1999-2000 to 2003-04). These are called the assessment
years. The relativity for each State for each assessment year is calculated using the
methods described in this attachment. The relativities for each of the five years are then
averaged. The five year averaging acts to reduce volatility in GST revenue distribution
from year to year.
3 The per capita relativities for each assessment year can be calculated using one of two
approaches — one based on assessed expenses and revenues, the other using assessed
differences. The assessed expenses and revenues model describes State requirements
in terms of total expenses, less revenues and specific purpose payments (SPPs) treated
by inclusion. The assessed differences model is based on differences from the average
in each of expense, revenue and SPPs. The latter approach is particularly useful for
understanding the changes in State requirements. This attachment explains both
approaches mathematically and shows their equilivance.
Mr Nomadic Navara – please substantiate your claim of bias towards QLD and WA. Where is the CGC biased? Where is their methodology deficient.. Please study the distribution model and if you can fault it I’m sure your State Treasury Department would like to hear from you.
Cheers, GPM
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