Peter Costello

Media Releases

GST Revenue Windfall to the States and Territories

No. 083


The States and Territories are benefiting from a cumulative GST windfall of $11.8billion to 2007-08, which is more than triple the estimate at the inaugural meeting of the Ministerial Council for Commonwealth-State Financial Relations (MINCO) in March 2000.

The continued strength of the economy is delivering to the States and Territories massive revenue windfalls from the GST.

With each successive update of the GST projections, the States and Territories are receiving an ever increasing amount of revenue. These amounts have not been factored into their budgets and represent a straight-out financial bonus.

The release of the Final Budget Outcome and the Pre-Election Economic and Fiscal Outlook in recent days contains GST data that again confirm this trend (see figures at Attachment A).

This latest data reveals that over the period to 2007-08, the total cumulative gain to the States and Territories from the GST will be $11.8billion (Attachment B).

The latest aggregate windfall is $2.9 billion higher than the $8.9 billion cumulative gain projected at the time of the 2004-05 Budget in May 2004. This indicates that in the space of barely four months, the States and Territories have received yet another massive and unexpected financial bonus.

To appreciate the sheer magnitude of the States and Territories financial bonanza, it is useful to revisit the projected impact of the GST on State and Territory finances at the time of the first meeting of Treasurers at the inaugural MINCO meeting in March 2000.

At that time it was expected that the gains from the New Tax System would take some time to flow through, but that by 2007-08 all States and Territories would be receiving a windfall under the New Tax System compared with the previous system of Financial Assistance Grants and the State and Territory taxes that were abolished. Over the entire period from 2002-03 to 2007-08, the States and Territories were originally forecast to be receiving a $3.7 billion windfall compared with the previous system.

The States and Territories have been unambiguous beneficiaries of the GST. This revenue is an ever increasing source of funds to finance their schools, hospitals and police services.

17 September 2004



17 Sep 2004

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