The Commonwealth Government has commissioned the Hon Nick Greiner AC, the Hon John Brumby and Mr Bruce Carter to undertake an independent review of the distribution of the GST among the states and territories.
Victoria welcomes the GST Distribution Review as an opportunity for real reform of Australia's horizontal fiscal equalisation (HFE) system, which is no longer fit for purpose and is producing counter intuitive outcomes.
Victoria's first submission (October 2011) to the review offered reform options based on an evaluation of the current system against the review’s core principles of efficiency, equity, simplicity and predictability.
Victoria's first GST Distribution Review submission (882 KB PDF)
In December 2011, the Commonwealth Government issued a supplementary Terms of Reference for the review. In response, Victoria’s supplementary submission to the review reiterates the case for improving the efficiency of the overall GST distribution system, while ensuring the GST remains an untied, policy neutral revenue source.
Victoria's supplementary GST Distribution Review submission (738 KB PDF)
The review released interim reports in April and June 2012 outlining the review panel’s views on the positions and ideas put forward by various interested parties. Victoria’s third submission to the review responds to these views, proposing substantive reforms and outlining how they would be implemented.
If adopted, these reforms will substantially improve the efficiency, equity, simplicity and transparency of the GST distribution system.
Victoria's third GST Distribution Review submission (updated 15 October 2012) (1 MB PDF)
To inform its analysis in preparing its submissions to the GST Distribution Review, Victoria commissioned a number of reports from prominent Australian academics. These reports do not necessarily represent the views of the Victorian Government or the Department of Treasury and Finance.
Ross Williams: History of federal-state fiscal relations in Australia: A review of the methodologies used (64 KB PDF)
Henry Ergas and Jonathan Pincus: Reflections on fiscal equalisation in Australia (261 KB PDF)
John Freebairn: HFE and migration decisions of mobile factors of production (84 KB PDF)
Cliff Walsh: Indigeneity and the interstate distribution of GST revenue (119 KB PDF)
Cliff Walsh: The equity case for equalising fiscal capacities (121 KB PDF)
Cliff Walsh: Fiscal capacity equalisation - An exploration and critique of the equity rationale (463 KB PDF)
The GST Distribution Review comes on the back of Victoria’s concerns regarding the Commonwealth Grants Commission's (CGC) approach to HFE as applied in its Report on GST Revenue Sharing Relativities – 2011 Update.
Victoria’s response to the 2011 Update summarises some of the major issues with the current CGC methodology, and suggests that the redistribution of GST amongst the states is not being undertaken in the most efficient, effective and robust manner.
