Federal Government's GST write-down reduces SA's forecast collections by $577 million

The Federal Government’s Mid-Year Economic and Fiscal Outlook (MYEFO) has reported a revised downward forecast in GST collections nationally, significantly reducing the amount of revenue to be shared between states and territories over the next four years.

Treasurer Rob Lucas said, based on the MYEFO GST downgrade, Treasury’s initial analysis is that there would be a $577 million write-down in forecast GST collections for South Australia in the four years between 2018-19 and 2021-22.

Mr Lucas said whilst this presented ‘obvious challenges’ for future budgets, the State Government was committed to handing down budget surpluses and cleaning up the enormous financial mess left by 16 years of Labor.

“There’s no question, MYEFO’s forecast GST write-down makes our task of budget repair more difficult,’’ said Treasurer Lucas.

“Based on current estimates, our upcoming budgets would face small deficits over the next few years instead of modest surpluses if we didn’t take corrective action.

“If these estimates are confirmed in next year’s Federal Budget, the Government will take corrective action.

“Clearly it is imperative that all departments deliver on the important savings tasks already outlined in the budget and we also need to increase revenue by growing the economy as promised.

“In addition, every budget includes contingency provisions for unexpected budget impacts. Obviously if used for this purpose, it reduces the capacity for the Government to respond to other funding requests through the year.”

Mr Lucas, however, urged caution in interpreting these GST forecasts. Historically, these figures tend to jump around.

Mr Lucas said there would likely be further GST revision in the 2019-2020 Federal Budget, due to be handed down in April – two months ahead of the next SA budget in June.

“For example, last year’s MYEFO also wrote down growth in national GST estimates in 2017-18, which was equivalent to a reduction of $575 million,” Mr Lucas said.

“However, only six months later in this year’s Federal budget, the GST forecast was actually increased by $1000 million in 2017-18.”

Over the coming weeks, SA Treasury officers will work with Federal Treasury officers in analysing these GST estimates.

This possible GST write-down will also place extra pressure on the Labor Opposition who oppose almost all budget savings measures by claiming there are significant increases in GST revenue coming in the budget.

*Total revision based on 2018-19 MYEFO (compared with SA 2018-19 Mid-Year Budget Review)

 

2018-19

2019-20

2020-21

2021-22

Total revision

-$72m

-$164m

-$181m

-$160m


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