Whinges expected and unexpected: gambling and Western Australia's share of the GST

OK, so you're expecting another "Whinge from the West" and you're not going to be disappointed.

But it isn't a whinge about Western Australia's share of the GST. The WA government is doing a good enough job on that front.

Nor is it a whinge about the fact that the body whose advice the federal government follows when it comes to the GST carve up, the Commonwealth Grants Commission (CGC), uses a rolling three year average when for calculating income from mining royalties. Even though this has the effect of imputing mining royalty income that WA hasn't been getting for a couple of years now.

And it is definitely not a whinge about "horizontal fiscal imbalance". I've no problem with the principle that "State governments should receive funding from the pool of GST revenue such that…each would have the fiscal capacity to provide services and the associated infrastructure at the same standard…"

I don't even have a problem with the CGC assuming that all infrastructure associated with the mining industry is provided by the mining companies, and not by state governments.

Nope, it's "None of the above".

My problem with the GST carve up is that Western Australia is being punished because it hasn't embraced gambling in the way that it has been embraced in other states.

I understand the basic principle. The CGC can't reward states for not introducing taxes and charges that might be considered the standard fare of state governments. You can't have states foregoing stamp duty, payroll tax or land tax in order to get both an advantage for local businesses and a greater share of GST revenues. (The Northern Territory gets special mention from the CGC in this regard for not having a land tax. See CGC link above)

It seems fair enough, then, that the CGC makes its calculations as "if each [state] made the same effort to raise revenue from its own sources and operated at the same level of efficiency."

That is, the principle makes sense in general. But I'm not convinced that the CGC should base its calculation of GST shares on the assumption that each state is raising the same amount of gambling revenue per person as every other state.

When did gambling revenue become standard fare for state governments?

Gambling revenue isn't the same as every other revenue. Different arguments and principles apply with respect to gambling and governments supporting, some might suggest sponsoring, gambling.

I'm aware that it is hard to do a simple cost-benefit analysis of gambling.

And I know that it's a big money earner for State governments.

So not encouraging gambling is bad for state revenues. And if private organizations mop up any social problems gambling creates, then it's three in a row ("win-win-win") for a state government and they've hit the jackpot.

I just thought that enough people were a little concerned about gambling and its effects for the members of the CGC's decision that it makes sense to raise a few concerns about, if not objections to, this approach. Especially given the propensity for Australians to become addicted to gambling.

It is heartening to know that Nick Xenophon sees the problem. But Team Xenophon and West Australians shouldn't be the only ones concerned about this. And if any "Whinges from the West" deserve to be taken seriously, then this one does.

There are a number of options here. One of them is for the members of the CGC to take actual gambling revenue into account (something "our" Allanah McTiernan called for during one of her earlier incarnations as a State Minister).

But the calculations are secondary to the bigger issue of whether we want more gambling, despite what many see to be its social costs.

It certainly seems worth a debate about the members of the CGC effectively encouraging the WA government to raise more money by increasing gambling in this state, rather than ignoring the implications of the way the members of the CGC treat gambling revenue. Even if it starts with a "Whinge from the West"…