The Federal Government has welcomed the final report of the independent GST Distribution Review.


Conducted by John Brumby, Bruce Carter and Nick Greiner, the review examined the process of horizontal fiscal equalisation to ensure that all States and Territories receive broadly equivalent funding for services such as education, health and public transport.


The Panel has undertaken an extensive consultation process. It has released an issues paper, two interim reports and received submissions from a range of stakeholders including State and Territory Governments, academics and peak lobby groups, on the principle of horizontal fiscal equalisation and other aspects of GST distribution.


Following the consultation period, the review recommended a series of refinements to the equalisation process.


The Panel considered the interaction between the Minerals Resource Rent Tax and state mineral royalties and confirms that resource rent taxes are more efficient than royalties. The Panel finds that royalty increases are neither desirable nor sustainable, and makes a series of recommendations to remove the incentive states currently have to raise royalties.


“I look forward to discussing the Panel's recommendations with State and Territory Treasurers at the Standing Council on Federal Financial Relations meeting on 17 December 2012, prior to announcing the Commonwealth's position once the Government has given thorough consideration to the complex issues addressed by the Report,” Treasurer Wayne Swan said.