in size, as well as create an impression that the system is unfair. The Victorian Government (sub. 53, p. 6) submitted: There may be legitimate reasons for such exclusions. For example, where there is no reliable, policy-neutral approach to objectively assess cost differences between States, or where reliable data is unavailable such exclusions should be independently and consistently administered by … the CGC to prevent political decisions from interfering with the independent process. … However, some other exclusions in the past have not been based on any obvious policy rationale. For example, inconsistencies are created through the differential treatment between funding for road and rail infrastructure (sub. 53, p. 6) … To reduce the ad hoc element introduced to the GST distribution system by the quarantining of Commonwealth payments, clear guidelines outlining principles of governance for quarantining should be developed. As noted by the 2012 GST Distribution Review, the establishment and publication of such guidelines would aid transparency and may also improve predictability for the States, by making it clear when a payment would or would not be quarantined (Brumby, Carter and Greiner 2012a, p. 70). This recommendation, like most made in that review, has not been subject to a government response. Similar to Brumby, Carter and Greiner (2012a), the Commission considers that the principles on which the guidelines should be based would be that Commonwealth payments are to be quarantined only in exceptional circumstances that are in the national interest, as quarantining undermines the objective of HFE. Commonwealth payments should also only be quarantined for reasons that would not already be considered by the CGC, in order to avoid duplication and additional complexity. 7.2 The Commonwealth needs to develop clear guidelines detailing the basis on which Commonwealth payments are to be quarantined from HFE by the Commonwealth Treasurer, so that they do not unnecessarily erode the efficacy of the relativities. CGC’s The guidelines should be based on the principle that quarantining of payments ought to only occur in exceptional circumstances. The Commission seeks further views on the principles that should apply with respect to considering which (if any) Commonwealth payments should be quarantined by the Commonwealth Treasurer, and hence would not affect the distribution of GST revenue.
in size, as well as create an impression that the system is unfair. The Victorian Government (sub. 53, p. 6) submitted: There may be legitimate reasons for such exclusions. For example, where there is no reliable, policy-neutral approach to objectively assess cost differences between States, or where reliable data is unavailable … such exclusions should be independently and consistently administered by the CGC … to prevent political decisions from interfering with the independent process. However, some other exclusions in the past have not been based on any obvious policy rationale. For example, inconsistencies are created through the differential treatment between funding for road and rail infrastructure … (sub. 53, p. 6) To reduce the ad hoc element introduced to the GST distribution system by the quarantining of Commonwealth payments, clear guidelines outlining principles of governance for quarantining should be developed. As noted by the 2012 GST Distribution Review, the establishment and publication of such guidelines would aid transparency and may also improve predictability for the States, by making it clear when a payment would or would not be quarantined (Brumby, Carter and Greiner 2012a, p. 70). This recommendation, like most made in that review, has not been subject to a government response. Similar to Brumby, Carter and Greiner (2012a), the Commission considers that the principles on which the guidelines should be based would be that Commonwealth payments are to be quarantined only in exceptional circumstances that are in the national interest, as quarantining undermines the objective of HFE. Commonwealth payments should also only be quarantined for reasons that would not already be considered by the CGC, in order to avoid duplication and additional complexity. 7.2 The Commonwealth needs to develop clear guidelines detailing the basis on which Commonwealth payments are to be quarantined from HFE by the Commonwealth Treasurer, so that they do not unnecessarily erode the efficacy of the CGC’s relativities. The guidelines should be based on the principle that quarantining of payments ought to only occur in exceptional circumstances. The Commission seeks further views on the principles that should apply with respect to considering which (if any) Commonwealth payments should be quarantined by the Commonwealth Treasurer, and hence would not affect the distribution of GST revenue.
horizontal-fiscal-equalisation-draft.docx