WA lost almost every cent it raised in iron ore royalties over the past decade as the Commonwealth Grants Commission redistributed the benefits of the mining boom to the rest of the nation. A breakdown of the commission’s rulings since 2006 and the State’s mining royalties reveals $39 billion that swelled WA coffers was lost in the annual GST carve-up.
Victoria has been the biggest winner from the WA mining boom, prompting calls from the mining sector to change the grants commission process. Every year the commission looks at the revenue and costs facing each State and Territory, redistributing GST based on the relative strengths or weaknesses of each.
In its most recent allocation, under which WA will get 34.4¢ of every dollar raised in GST in the State, almost $5.8 billion worth of “mining production” was moved between the States and Territories. WA accounted for $5.3 billion of the total that was moved to other areas.
Since the middle of last decade, WA has lost almost $39 billion under the GST carve-up because of its relative strength in mining. The loss is larger than the $37.8 billion in iron ore royalties collected by the State Government since 2006-07, and not far short of the $46 billion in total mining and energy royalties raised over that period. Of the $39 billion, more than $18.6 billion was sent to Victoria, and another $14.5 billion went to NSW which, after Queensland, is the nation’s second-largest coal mining State
Minerals Council chief executive Brendan Pearson said the perverse outcomes that had hit WA were hurting the industry and the entire economy. “A system which penalises States that expand their mining sectors and rewards States which adopt policies to curtail mining activity is not working,” Mr Pearson said. “We can’t afford GST distribution arrangements which discourage States from developing their mining sectors.”
While WA lost billions because of the mining sector, it was only partially offset by grabbing GST to compensate for the cost of supplying the State’s remote communities and providing specialist services to indigenous communities. Pressure is building within the Labor Party to come up with an overhaul of the grants commission system.
Federal Labor MP for Fremantle Josh Wilson, used a short address to Parliament to argue that the allocation was not working and complained the top-up from the Federal Government to WA left the State vulnerable to a “top-down, high-handed approach. The bottom line is the current system which last week allocated WA 34¢ in the dollar at a time of severe economic downturn is not fair and it is not working,” he said.
Source: The Western Australian