ADOPTING a model of competitive federalism could be the long term answer to WA’s GST crisis, according to West Australian Senator Linda Reynolds.

Senator Reynolds said without changes to the way Australian federation operated within our constitution, poorly performing states and territories would never have an incentive to innovate and transform.

“Under the current system the better a state performs, and the more investment and business it attracts, the less GST it receives,” Senator Reynolds said. “This year alone $4.5 billion of WA’s GST will go to other states and territories, this is no incentive for economic progress and it is clearly time for a new approach.

“WA’s current share of GST is both unfair and unsustainable, and when the formula for distribution was developed current extreme highs and lows of commodity prices were not factored in.

“This is why the WA Liberal team continues to fight for economic reform to deliver a better deal for WA. I fully support calls for WA’s share of GST to be frozen at the current level until a longer term solution is found.”

Federalism at its core should be a competitive endeavour where sovereign state and territory governments are competitive both economically and in service delivery.

“Healthy competition between states and territories would inevitably lead to better social and economic outcomes for all Australians,” she said.

“Here in WA, a competitive federalism model would further incentivise the entrepreneurism that has always underpinned our economy. “What is good for WA is good for Australia.”

Senator Reynolds said the Government’s Reform of the Federation White Paper and the White Paper on Reform to Australia’s Taxation System were a once in a century opportunity for all West Australians to have a say on the future of both their state and country.

“Our Federation must evolve to adapt to the needs of contemporary Australia,” she said.

“Just as the Commonwealth Grants Commission was created as a response to WA’s attempts to succeed in 1933, we must again reform the methodology for fair distribution of revenue and implement a more competitive approach between states and territories.”

–ENDS– Media contact: Jessica Hayes 0427 333 147

FAST FACTS:  

• Senator Reynolds has held a longstanding interest in federation reform and recently hosted a Federation Forum in partnership with the Australian National University in Canberra last month.
• Australia currently operates under a cooperative federalism model that impedes horizontal competition between states and territories.
• This week a group of Coalition Senators and Members, including Senator Reynolds, will tour the Pilbara region of WA to see first-hand the challenges currently facing industry, business and communities.
• WA Liberals favour a cap or freeze on the current allocation of 37.6 cents in every dollar as an interim measure to stop unfair cuts to GST revenue to below 30 cents in the dollar.