Federal Register of Legislation - Australian Government

Primary content

Determinations/Financial (Other) as made
This instrument determines the GST revenue-sharing relativities for 2015-16.
Administered by: Treasury
Registered 08 May 2015
Tabling HistoryDate
Tabled HR12-May-2015
Tabled Senate13-May-2015

EXPLANATORY STATEMENT

Federal Financial Relations Act 2009

Determination of the GST Revenue Sharing Relativities for 2015-16

Section 8 of the Federal Financial Relations Act 2009 (the Act) empowers the Treasurer to make a determination that a factor specified in the determination is the GST revenue sharing relativity for a State for a payment year.

As agreed by the Council of Australian Governments in the Intergovernmental Agreement on Federal Financial Relations, the Commonwealth makes GST payments to the States equivalent to the revenue received from the GST.  The GST payments are distributed among the States in accordance with the principle of horizontal fiscal equalisation and having regard to the recommendations of the Commonwealth Grants Commission (the Commission).

The Commission recommends GST relativities to be used in calculating each State's share of GST payments.  The relativities determine how much GST revenue each State receives compared with an equal per capita share and are determined such that, if each State made the same effort to raise revenue from its own sources and operated at the same level of efficiency, each State would have the capacity to provide services and associated infrastructure of the same standard. 

This does not necessarily result in the same standard of government services — just the equalisation of each State's capacity to provide the same standard of services.  In calculating the GST relativities, the Commission takes into account differences in the States' capacities to raise revenues and differences in the costs the States would incur in providing the same standard of government services and associated infrastructure.

The Act also requires the Treasurer to consult the States before making the GST relativities determination.  The Treasurer consulted the States at a meeting of the Council on Federal Financial Relations on 9 April 2015.