GST Recovery Forecast
Thu 17 May 2012
The Premier, Lara Giddings, said Tasmania's GST receipts are forecast to recover sharply in the coming years as the one-off impact of the Royal Hobart Hospital payments wear off.
Other factors, including Western Australia's sky-rocketing mineral royalties, are also expected to lead to an increase in Tasmania's relativities in future.
Ms Giddings said the Tasmanian Treasury had adopted the same approach for forecasting future GST revenues as Western Australia, South Australia, NSW and Victoria.
"The Commonwealth uses a relatively simple formula for determining each state's share of the estimated level of GST Revenue that does not factor in the fluctuations of the Commonwealth Grants Commission process," Ms Giddings said.
"For example, Tasmania's GST relativities have been distorted by the capital funding for the Royal Hobart Hospital project but once this money flows through the system we can reasonably expect our GST payments to bounce back."
"Over the Forward Estimates period GST receipts are forecast to grow by $446.7 million or an average increase of 8.1 per cent a year, reflecting our improved share of the national GST pool.
"To put that in perspective, the overall GST pool is expected to increase by $7.9 billion over the same period."
With GST and State taxation revenue predicted to improve we should return to savings in excess of $500 million by 2016.
"This methodology is not new and has been used by other states to predict their GST revenues with greater accuracy for some time.
"The Victorian Liberal Government's recently released Budget predicts GST receipts will be $1 billion better across the Forward Estimates than the forecasts in the Commonwealth Budget."
Ms Giddings said Tasmania's future Budget position would also be boosted by the benefits of the carbon tax.
"As Australia's largest generator of renewable energy, Tasmania has a significant carbon advantage.
"The benefits of the carbon tax will start flowing through to Hydro Tasmania this financial year and will increase steadily across the Forward Estimates.
"We have already using these benefits to offset the cost of halving power price increases from July 1 and future increased dividends from Hydro will allow us to support and strengthen core services including health, education and public safety."