This idea is about more than revenue. The way the GST and the Commonwealth Grants Commission interact effectively denies Australia, and Queensland, one of the main benefits of federation.
Federation is designed to work like a sporting league. Australia produces world class sporting teams because club competition hones the skills of players by pitting them against each other in competitions, giving coaches and managers the tools and incentives to innovate and develop the very best players and teams.
Likewise competition between the states should build better habits of governance; stronger economies; and better health and education systems.
But the CGC hobbles all of this, and handicaps the states so that no matter how well they perform, they don’t get rewarded for it. The CGC takes money from states with above average performance and gives it to states, like South Australia and Tasmania, who are deliberately mismanaging themselves.
Distribute the GST per capita and the commission can be removed, and the states who perform will be automatically rewarded and those that don’t will tend to change their governments for ones that can manage well.
There would be a pay-off for Queensland, which has tended to over-perform. Over the 5 years to 2014-15 the state would have received $2.75 billion more if it had received an amount of GST in proportion to its population.
It would also mean we could cut taxes to attract business, and if the business we attract is mining, we won’t be further penalised because we get to charge mineral royalties.
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