Time to end GST redistribution: 2018 update

12 Apr 2018

In December 2017 the Institute of Public Affairs published Time to End GST Redistribution, a research report into the complex process of distributing the GST revenue among the Australian states and territories, known as “horizontal fiscal equalisation” (HFE).

The 2017 report critiqued the underlying rationale and the various practical problems associated with horizontal fiscal equalisation as it is practiced in Australia. The 2017 report also included original calculations of how much each state has contributed to the GST pool since it was introduced in 2000/01, and how much had been redistributed away from or to each state and territory over that time.

The original calculations in the 2017 report supported the argument that there has been a significant misallocation of GST revenue based on the principles of equal per capita distribution (where states receive GST revenue according to their share of the national population) and state of origin distribution (where GST revenue is distributed according to the amount that is attributable to each state).

This report reiterates those critiques and updates the calculations to include the 2016/17 financial year, based on recently released Australian Bureau of Statistics consumption data. This report also forecasts the extent of GST revenue distribution in the 2017/18 and 2018/19 financial years using the Commonwealth Grants Commission’s Report on GST Revenue Sharing Relativities: 2018 Update released in April 2018, projected population data, and estimates of future consumption.

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