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Health reform agreement and GST implications

Comments on Sue Cato “Post-COAG triage”, 23/04/2010, http://www.businessspectator.com.au/bs.nsf/Article/COAG-health-reform-Kristina-Keneally-Rudd-pd20100422-4R2QT?OpenDocument&src=blb

Many people may be puzzled why the Western Australia Premier Colin Barnett has been alone in not accepting the health agreement deal, including some policy makers and analysts.

It would be interesting to know if Sue Cato understands the GST implications for WA and other States when she judged that Barnett was a loser in not accepting the agreement at its current form.

Had Barnett accepted the deal on Tuesday, WA would or could be a big loser out of GST allocation.

As Barnett said WA now gets only 68 cents in a dollar. If the Commonwealth Grants Commission does not change its assessments and only the GST pool is reduced by a third, then WA is likely to get 46 cents in a dollar, while some other States get more.

While it is likely that Barnett will hand over 1/3 of WA's GST revenue to the Commonwealth in the end, he will make sure that all these changes will not further disadvantage WA in GST allocation by the Commonwealth Grants Commission.

So, it is premature to declare that Barnett is a loser. Barnett is much more clever than many commentators are on this GST issue.

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