Page 195 - Week 01 - Wednesday, 15 February 2012
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MRS DUNNE: Treasurer, what action have you taken to attempt to change the dramatic reduction in the ACT’s GST relativity and, if you have done nothing, why?
MR BARR: The government presents to the Grants Commission as part of that process—
Mr Seselja interjecting—
MR BARR: I think the Leader of the Opposition is failing to understand the distinction between future policy reviews and an ongoing process. There is a GST policy review and then there is the Grants Commission process in relation to relativities. You are conflating the two—deliberately, I presume. I think you are smarter than that. I will give you the benefit of the doubt. But there are two issues. One relates to the Grants Commission’s allocation of GST revenues and then there is a broader policy debate that is occurring and is the subject of further policy discussion. In fact, the federal Treasurer recently revised the terms of reference for the group who are looking at this issue and has invited further submissions that the ACT government will be partaking of. Yes, the ACT government and the Chief Minister participated in that process when she was Treasurer and the process continues. The process continues in relation to further submissions on this matter. I have spoken with my federal colleagues in relation to these issues and will continue to do so.
MRS DUNNE: Supplementary, Mr Speaker.
MR SPEAKER: Yes, Mrs Dunne.
MRS DUNNE: Minister, why has the Grants Commission decided to reduce the ACT’s GST relativity so dramatically?
MR BARR: As I said, the process is an annual one where the Grants Commission makes determinations on the basis of a jurisdiction’s capacity to deliver an average level of services. From time to time, due to the various impacts of the financial position of other jurisdictions, the GST relativities are adjusted. As we have seen in recent times, due to the resources boom, the relativities, for example, of the state of Western Australia have continued to reduce, reflecting that jurisdiction’s capacity to raise more revenue at a local level.
The Grants Commission goes through the process and assesses the revenue-raising capacity, the level of service provision that is required within a jurisdiction, that jurisdiction’s capacity to raise revenue and the relative size of that jurisdiction—so questions of economies of scale come into play. There are a variety of factors that the Grants Commission takes into consideration when making those determinations. The relativities are just that—relative to other jurisdictions. So actions and activities that occur in other jurisdictions also impact on the Grants Commission’s final determinations.
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