GST Relativities of the Australian States

GST Relativities of the Australian  States

by David Archibald

28 March 2017

 

The Nation is afflicted at all levels by a political class which is stupid and clueless. That affliction manifests itself in more and more ways as the days pass. One stupidity which is particularly galling to people west of the Nullabor is the way GST revenue is carved up between the states and territories. Figure 1 following shows how WA’s share has fallen over the last 10 years:

Figure 1: GST share by state and territory relative to population

The WA Government, now controlled by left-leaning unions, calculates that WA was shortchanged by $4.7 billion in the 2016 budget year. The loss over five years going forward is estimated to be $17.8 billion as per Figure 2:

Figure 2: WA GST shortfall going forward to 2020

Not shown in Figure 1 is the data for the NT, because it would have blown out the scale. For the 2016-17 year, the NT will be getting 5.28x what it should be getting relative to population, up from 4.16x in 2000-01.  In the fifteen years of data, South Australia and Tasmania have always got more than their fair share of the GST revenue, now up to 1.2x and 1.76x respectively. Perhaps the biggest insult is that the wealthy, clean and civilised ACT gets 1.28x its fair share.

The GST carve-up under the Grants Commission is simply a wealth transfer exercise — socialism that rewards the idiotic antics of the South Australian and Tasmanian governments. It is well past time to close it down -– no tweaking.

Figure 3:  Australian annual population growth by source

To add insult to injury, WA’s unemployment rate is now 6.5% because the mining boom continues to wind down. But population growth is still galloping along at 1.5% per annum. Figure 3 above shows continued high and unnecessary immigration is the source of that unemployment pressure.

Figure 4:  House prices by capital city, quarterly from 2002, thousand dollars

Continued low interest rates combined with high immigration have pushed up house prices as shown by Figure 4 above. Sydney house prices have doubled in the last eight years.

Figure 5: Housing value as a percentage of disposable income

Lastly, Figure 5 shows that Australian housing prices, relative to income, are twice what they were 20 years ago. Most other countries are well off the peaks established in their housing bubbles. Australia is still near its peak and on a par with China’s housing bubble.

 

David Archibald is the author of American Gripen: The Solution to the F-35 Nightmare