Budget 2009 10: Federal-state
GST transitionary assistance to expire
Under existing arrangements for the payment of GST revenue to
the states, it is possible that some states will be worse off than
if the pre-GST arrangements had continued to apply.
When the Howard Government introduced the GST, it pledged that
no state would be worse off under the new arrangements compared
with the former arrangements. The pledge was that if a
state’s GST entitlement was less than the amount it would
have received under the former arrangements—the guaranteed
minimum amount—the Federal government would top up that
state’s GST entitlement with budget balancing assistance.
This pledge was initially due to expire on 30 June 2006. The Howard
Government subsequently extended this transitional period to 30
The strong growth in GST revenue meant that for the period
2004–05 to 2007–08, the Federal government did not have
to pay any budget balancing assistance. However, Budget Paper No. 3
indicates that the Federal government will have to pay budget
balancing assistance of $261 million in 2008–09. But with the pledge to
provide budget balancing assistance due to expire on 30 June 2009
and the future level of GST payments uncertain, some states might
receive less GST than their guaranteed minimum amounts in
2009–10 and beyond. Some states could therefore be worse off
than if the pre-GST arrangements had continued to apply.
Australian Government, Australia’s federal relations:
budget paper no. 3: 2009–10, Commonwealth of Australia,
Canberra, 2009, p. 116.