If a payment was used to maintain the current approach so that fiscally weaker States ‘top up’ would not lose out under an EPC distribution, this would come at a total cost of $6.8 billion. Table C.1 Effects of equal per capita distribution 201819 GST payments and relativities Source: Productivity Commission estimates based on data provided by the CGC. Equalisation to less than the strongest State Equalisation to less than the strongest State involves lifting States up to some agreed level of fiscal capacity, but not bringing them up to the fiscally strongest State as presently occurs. The balance of the GST pool would then be distributed on an EPC basis. There are many possible variants of this form of equalisation. Equalisation to the average One approach to this could involve distributing GST payments to raise fiscally weaker States to the average fiscal capacity of all States. This involves using the current CGC approach to fund the weaker States based on the additional amount needed above their EPC share to address their (above average) assessed fiscal needs. It then apportions the remaining GST pool to all States on an EPC basis. For the 2018 financial year relativity calculations, all States but New South Wales, Victoria and Western Australia require GST payments to reach this fiscal capacity. The difference between GST payments under this approach and current practices are presented in table C.2. For 201819, this approach would reduce GST payments to all States but New South Wales and Western Australia.
If a ‘top up’ payment was used to maintain the current approach so that fiscally weaker States would not lose out under an EPC distribution, this would come at a total cost of $6.8 billion. Table C.1 Effects of equal per capita distribution 201819 GST payments and relativities Source: Productivity Commission estimates based on data provided by the CGC. Equalisation to less than the strongest State Equalisation to less than the strongest State involves lifting States up to some agreed level of fiscal capacity, but not bringing them up to the fiscally strongest State as presently occurs. The balance of the GST pool would then be distributed on an EPC basis. There are many possible variants of this form of equalisation. Equalisation to the average One approach to this could involve distributing GST payments to raise fiscally weaker States to the average fiscal capacity of all States. This involves using the current CGC approach to fund the weaker States based on the additional amount needed above their EPC share to address their (above average) assessed fiscal needs. It then apportions the remaining GST pool to all States on an EPC basis. For the 2018 financial year relativity calculations, all States but New South Wales, Victoria and Western Australia require GST payments to reach this fiscal capacity. The difference between GST payments under this approach and current practices are presented in table C.2. For 201819, this approach would reduce GST payments to all States but New South Wales and Western Australia.
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