GST Distribution

The Hon. A. PICCOLO (Light) (14:28): My question is to the Treasurer. Can the Treasurer provide the house with an update on GST distribution arrangements?

The Hon. S.C. MULLIGHAN (Lee—Treasurer) (14:28): I thank the member for his question and interest in this really important matter, not just for South Australia but for the entire nation. As members would be aware, GST grants are an important source of revenue for the budget. They contribute roughly 30 per cent of state government revenues, and fluctuations in these revenues can have significant impacts on not only budget capacity but also budget outcomes. We have seen this this year, of course, with the forecast reduction of $95 million in this year's GST revenues—

Members interjecting:

The SPEAKER: Order!

The Hon. S.C. MULLIGHAN: —a major contributor to preventing the budget's transition back into surplus this financial year, of course an important thing to achieve given that the last two financial years reported deficits of $1.7 billion and $820 million.

Members interjecting:

The SPEAKER: Order!

The Hon. S.C. MULLIGHAN: I am glad I am being verballed by the member for Dunstan, Mr Speaker, because he gets a walk-on role in this answer.

Members interjecting:

The SPEAKER: Order!

The Hon. S.C. MULLIGHAN: He gets a walk-on role in this answer. Since the tax was introduced in 2000, the arrangements that were struck by governments of those times—

Members interjecting:

The SPEAKER: Member for Florey! Member for Colton! The Treasurer has the call. The member for Hartley is warned. Order! Members to my left and right, the interjections are so intense that it is not possible to hear the Treasurer. The Treasurer has the call.

The Hon. S.C. MULLIGHAN: You would be aware that when the GST was first introduced the distribution arrangements meant that each state and territory would have the same fiscal capacity to provide the same level of government services and infrastructure. This is the principle of horizontal fiscal equalisation.

Mr Cowdrey interjecting:

The SPEAKER: Member for Colton! The member for Colton is warned.

The Hon. S.C. MULLIGHAN: It means that smaller states and territories are able to receive more than their population share of notional GST revenues—

Members interjecting:

The SPEAKER: Member for Colton, order! Member for Badcoe!

The Hon. S.C. MULLIGHAN: —reflecting their smaller populations, along with other factors, and it means they don't have the capacity to raise revenues to the same level of services of larger states. In 2018, the former Coalition federal government changed the way the GST revenues are distributed to the states, undermining the principle of horizontal fiscal equalisation and introducing a new regime that exclusively benefits one state—Western Australia—over all other states and territories.

Members interjecting:

The SPEAKER: Order!

The Hon. S.C. MULLIGHAN: It can comfortably be referred to as the greatest—

Members interjecting:

The SPEAKER: Treasurer, please be seated. Order! The member for Colton and the member for Florey will depart under 137A for the remainder of question time. The Treasurer has the call.

The honourable members for Colton and Florey having withdrawn from the chamber:

The Hon. S.C. MULLIGHAN: This action by the former Coalition government can comfortably be referred to as the greatest act of fiscal vandalism ever undertaken in our nation's federation. This arrangement came into effect for the 2021-22 financial year and has been phased in over a six-year period. Do you know how it was described at the time—the walk-on cameo now from the member for Dunstan? He called this a massive win for South Australia—a massive win for South Australia. Standing only a few feet to my left here, he stood here and said it was a massive win for South Australia, such is his grasp on the necessities of leadership and government here in South Australia.

Members interjecting:

The SPEAKER: Order, member for Morphett! The member for Morialta on a point of order, 134.

The Hon. J.A.W. GARDNER: It could be 98 or 137. I will lean towards 98.

The Hon. S.S. Marshall interjecting:

The SPEAKER: Member for Dunstan! I have the point of order, 98. I will bring the Treasurer back to the question.

The Hon. S.C. MULLIGHAN: These arrangements will see Western Australia now forecast to receive $5.6 billion more in GST revenue next financial year than it would have received under the previous arrangements, entirely underpinning its forecast surplus. All other states and territories are denied this same amount of GST revenue. In that same financial year, South Australia would stand to lose $372 million. The loss for larger states like Victoria and New South Wales is over $1 billion a year. It is now up to the current state Labor government and the new federal Labor government to try to unpick these arrangements to ensure South Australia isn't left worse off by this fiscal vandalism. I look forward to keeping the house apprised of our efforts.