Treasurer Chris Steel says the ACT Government is pressuring the Commonwealth in several ways to get a better deal. Photo: Michelle Kroll.
Treasurer Chris Steel has suggested even if it were legally possible for the Territory to receive payroll tax from the APS, it wouldn’t be the best thing for the ACT’s bottom line.
ACT Greens deputy leader Jo Clay put forward a proposal in the Legislative Assembly which she said would inject more than $650 million into the ACT’s budget by making several demands of the Federal Government.
The proposal included seeking a minimum 50/50 Commonwealth funding on all ACT infrastructure projects that cost more than $5 million; seeking $550 million reimbursement of missed GST from the Commonwealth due to population undercounting; getting the ACT’s historic housing debt waived; seeking a “fairer allocation” in lieu of Commonwealth public servant payroll tax; and introducing a fossil fuel tax by 2026.
“We were sold this story by Labor that the ACT Budget required ‘tough’ decisions, but the reality is Canberra is simply not getting its share of Commonwealth funding,” Ms Clay said.
“While everyday people were slapped with a new health levy, the ACT was already missing out on at least $116 million per year – more than double what the levy would raise – from the Commonwealth Government to specifically fund our health system.
“We’re also missing out on at least $650 million from population backpay and our historic housing debt, which was waived in Tasmania and South Australia.”
She also called on the ACT Government to complete aged care assessments and NDIS applications for hospitalised patients within a week of first admission, and to lobby the Commonwealth for sufficient home care packages and residential places.
During the motion’s debate, Mr Steel described the challenges of the “vertical fiscal imbalance” being experienced by many jurisdictions in terms of how populations had been counted and revenue distributed.
The ACT has less ability than other jurisdictions to raise revenue. For example, it can’t tax mining operations like Western Australia and it can’t tax the largest employer and owner of land in the Territory, the Commonwealth.
“The current GST distribution system assesses the payroll taxable base for all [jurisdictions],” Mr Steel said.
“Under this assessment, a jurisdiction’s inability to levy payroll taxes on APS employment is already captured.”
Mr Steel said if the Commonwealth were to decide to allow APS payroll tax to be collected – which isn’t legally possible – all jurisdictions would need to be reassessed.
“In the case of the ACT, our revenue-raising capacity from payroll would likely double,” he said.
“All other things being equal, this would likely cause the ACT’s revenue-raising capacity to shift from being below average to above average and for the ACT to shift from being a recipient state to a donor state.”
But this could also have an adverse consequence.
“As the ACT can raise the most APS payroll revenue of any jurisdiction, it would potentially lose more than it raises through the GST redistribution process,” Mr Steel said.
“If APS employment was included, the ACT could may well be worse off than the current situation.”
Mr Steel said the best way the ACT could try to alleviate the challenges it was facing would be through changing how GST was allocated.
The ACT has consistently had its population undercounted by the Australian Bureau of Statistics (ABS), which uses details attached to Medicare cards to estimate a jurisdiction’s population between census counts.
Given the ACT’s mobile population, Mr Steel said many people didn’t update their details each time they moved, which impacted on the count.
On other points in the motion, the ACT has long called for its historic housing debt to be waived – which currently stands at $64 million – and to get the Commonwealth to contribute more to health costs.
Mr Steel said there weren’t any legal mechanisms to provide historic paybacks of under-calculated GST allocations.
The government altered Ms Clay’s motion to note the Commonwealth did provide 50/50 funding for all ACT road infrastructure and for the Territory to keep advocating for “better and fairer” counting of the population.
The amendment also deleted the call for a fossil fuel tax.
This version of the motion passed the Assembly.
ACT Greens deputy leader Jo Clay is not impressed her call for a fossil fuel tax has been removed from her motion. Photo: Michelle Kroll.
Ms Clay accused the government of stopping short on “driving real climate action”.
“We are in a climate emergency and instead of leadership from the ACT Labor Government, they have united with the Liberals to vote down a tax on big polluters to pay their fair share and fund the things Canberrans actually want and need,” she said.
“The ACT Greens will not stop pushing for a fossil fuel tax. We will continue to back the community’s calls to get big polluters to pay their fair share to fund the transition to renewable energy and deliver essential services for people and planet.”
