Tasmanian Times

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

Economy

‘State loses $188 million GST …

*Pic: Treasurer Peter Gutwein and Premier Will Hodgman spruik the 2016 Budget …

… because Public Sector wages are too low

The state budget will be docked by $188 million in GST funding in 2018-19 because government employees in Tasmania are paid less than in any other state or territory.

The Commonwealth Grants Commission, which administers the GST, will redistribute this money to states which pay more, particularly to Western Australia. The Commission does this to even out the cost between the states of providing services.

Over six years, the total cost to Tasmania in lost GST because of low public sector wages is $816 million.

A copy of the full analysis of this issue, and of my media release, are attached to this message.

The Tasmanian government’s 2% wages cap therefore delivers no benefit to the budget but involves a substantial hit not only to workers’ incomes but also to the economy as a whole.

If the government paid its employees at the national average level calculated by the Commission, each full-time equivalent employee would receive an extra $8,200 a year. As this money recirculated through the private economy, about $400 million would be gained in overall economic benefit with no net loss to the state budget.

This would be of particular benefit to consumer-oriented businesses, such as retailers.

The Grants Commission began equalising GST because of wage costs in 2012-13, when Tasmania lost $100 million. That amount has sharply increased as a result of the government’s salary cap and in the current financial year is $170 million. The Commission’s recently released GST Update shows this will rise by $18 million in the coming financial year to $188 million.

The sharp decline in Tasmanian public sector wages as a result of the salary cap has not yet been fully factored in to the Commission’s calculations, which involve a three-year moving average and therefore a lag. In 2019-20, the state’s GST share is likely to lose in excess of $200 million.

In 2018-19, Western Australia will gain $712 million and New South Wales will gain $147 million.

For the record: this report was not instigated by any person or organisation. Nobody paid me for it.

• Download ….

gst_and_public_wages.pdf

*Martyn Goddard is an independent policy analyst

17 Comments

17 Comments

  1. TGC

    May 16, 2018 at 2:15 pm

    Is the meaning of this that unless we pay public servants more money we will not get a fair share of the GST?
    Who benefits?

  2. john hayward

    May 16, 2018 at 3:44 pm

    Ask your Lib mates, TGC.

    It probably means that the money that would ordinarily have gone into the Tas Lib pork barrel will now go into the Turnbull pork barrel, and then on to some Lib oligarchs, possibly in their GBR Foundation.

    John Hayward

  3. Luigi

    May 16, 2018 at 5:37 pm

    This is a semi-plausible reason to cut Tasmania’s GST and give it to WA. If this excuse was unavailable, another one would have been found. WA was always going to get the money.

    Anyway, Tasmania didn’t return a single Liberal MP at the last Federal Election. So there.

    Anyway, the much touted upturn in the Tasmanian economy should generate a significant natural increase in GST revenue .. if the upturn actually occurs.

  4. TGC

    May 16, 2018 at 7:29 pm

    #1 … I did better!

    I just asked Brian Mitchell (Labor MHR Lyons- his office-just up the road) and, obviously hedging their bets a bit, declining to comment directly on the above article, which I showed them, said a Labor Government would “seek to” restore Tassie’s GST to the proper level without any offsetting penalties

    I’d be happy with that.

  5. Ted Mead

    May 17, 2018 at 12:33 am

    This is a classic case of shooting oneself in the foot after the Liberals made those public service cuts.

    Predictably they will now come out and state they don’t have the funds to provide adequate financial service and upgrades to the state’s ailing health system as they promised.

    The circus goes on!

  6. Gordon Bradbury

    May 17, 2018 at 11:07 am

    “fair share of the GST….”!

    Tasmania has never had a “fair share” of the GST. We steal from mainland taxpayers to pay for our profligate, mendicant lifestyle.

    Nothing fair about that at all.

  7. Russell

    May 17, 2018 at 12:17 pm

    “The state budget will be docked by $188 million in GST funding in 2018-19 because government employees in Tasmania are paid less than in any other state or territory.”

    Utter rubbish! Tasmanian Public Servants (except for health, education and police) are paid way too much for the very little they do. I’d like to see them get a job in the real world and living on a private employment wage.

    The reason why WA and every other state or territory gets or should get more GST is because they actually contribute more. Tasmania is largely a welfare-dependant state, and that includes the public service and all its hangers-on.

  8. Leonard Colquhoun

    May 17, 2018 at 1:50 pm

    “Anyway, Tasmania didn’t return a single Liberal MP at the last Federal Election” (Comment #3) – but that’s wrong The State has four federal MPs, including a fave on this site!

  9. Luigi

    May 17, 2018 at 3:14 pm

    #8 … I think what I wrote is correct. In Federal Parliament there are Senators and Members. Tasmania has five Members, none of whom are Liberal.

  10. Chris

    May 17, 2018 at 3:52 pm

    Wee Willy Winky promised an IMMEDIATE 50% reduction in stamp duty for downsizing pensioners when they bought a smaller residence.

    Where is my rebate, or was it in the form of a porky?

    Wot’s the definition of IMMEDIATE ?

    They get it both ways .. from the purchaser of the property around $15,000 and the downsizer, who in this day will pay in excess of $13,000 and the friends of the developers and real estate who will pocket another $25,000 between them – that is $53,000 all up.

    Gutwhinger smiles a lot and Fergusonson stands there still, says mother words, and does nuffin.

  11. Leonard Colquhoun

    May 17, 2018 at 4:16 pm

    “# 9, #8 … I think what I wrote is correct.”

    Loosely, yes, sort-of. Yes, the federal parliament comprises “Senators and Members” but all 224 of them are MPs, as in ‘Members of Parliament’ which is thus a general term applicable to most parliaments world wide. The (current) 150 MPs in the House of Representatives are MHRs.

    Our State MPs are MHAs and MLCs.

  12. Luigi

    May 17, 2018 at 7:06 pm

    #11 … No, not loosely .. quite precisely.

    Your analogy with the state legislature is irrelevant. And four isn’t five.

    I’ll say it more firmly this time: you’re wrong.

  13. Leonard Colquhoun

    May 17, 2018 at 8:51 pm

    “12.#11 … Your analogy with the state legislature is irrelevant. And four isn’t five”:

    ~ there is no ‘analogy’ in my #11; there is, however, an extra example of how the term ‘MPs’ is used in its comprehensive sense, which does not make it ‘irrelevant’, just ‘extra’;

    ~ the aph.com.au website lists four Liberal senators for Tasmania: Abetz, Bushby, Colbeck and Duniam.

  14. Colin Gumley

    May 21, 2018 at 1:13 am

    I thought that our Premier and Treasurer were going to fight tooth and nail to keep the GST at the same level, or was it another polite ” please ” phone call ?

  15. Nigel Crisp

    May 21, 2018 at 12:33 pm

    No Colin #14, that was BS from Will before the election. After it, all bets are off, just like they were for the Glenorchy ratepayers.

    Saturday Mercury, 19th May, we had a pumped up Minister Gutwein telling us the “Top Job is Not on my to-do List.” I thought then it was very charitable of the man to inform us of this when the ratepayers of Glenorchy can’t extend their charity that far. A man who sat on his hands for 2 years while the bills mounted now thinks he’s somehow in contention for the top job. I might suggest the Glenorchy residents think the opposite.

    Naturally, communication of the steep rate rises had to come after the election, otherwise Mr Gutwein mightn’t have a job.

    Sorry to drift off-topic, but we’re a bit pissed off out the northern suburbs way, so the mere mention of Tasmania and politics right now gets me steamed.

  16. Harry

    May 21, 2018 at 1:18 pm

    “This would be of particular benefit to consumer-oriented businesses, such as retail”

    Would this logic also apply to a $50 per week increase in welfare payments?

    Oh,sorry, I just remembered any increase would be spent on alcohol,drugs and gambling.

  17. stephen menadue

    May 21, 2018 at 9:31 pm

    #16 … It might be spent on such things .. but only for some, not all.

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