The Independent Member for Denison, Andrew Wilkie, has rejected claims from the AMA about the impact of federal funding for the Royal Hobart Hospital on Tasmania’s future share of GST.

Mr Wilkie said the facts are:

As a result of the funding the Tasmanian Government will end up with much more money in its pocket and a redeveloped RHH.

The exact impact of the $340m for the RHH will not be known until March next year and will be spread across three financial years from 2012-13, so any predictions now are premature and baseless.

But to give a sense of the scale of such calculations, according to Federal Treasury between 2007-08 and 2009-10 Tasmania received an average of $1.07b a year in Commonwealth payments for specific purposes and GST revenue in 2011-12 is to be reduced by only $102.7m as a result.

Therefore the AMA’s calculation that the State Government will lose all but $12m of the $340m in offset GST is plain wrong as it fails to consider the billions in funding that other states and territories receive in Commonwealth infrastructure payments.

The AMA’s $12m calculation does not take into account Commonwealth funding for infrastructure projects in other states which is redistributed to Tasmania and which offsets the impact of RHH funding on Tasmania’s GST share. 

For example funding for projects such as $3.2b Regional Rail Link in Victoria and the Gold Coast Light Rail have delivered additional GST to Tasmania through the same process as have the many billions of dollars in infrastructure the Commonwealth has funded Australia-wide.

The situation with the RHH funding is identical to most Commonwealth payments for specific purposes in Tasmania.  This means federal funds for the Kingston Bypass, Building the Education Revolution improvements to numerous schools, the upgrade to chemotherapy and cancer facilities at the Burnie Regional Hospital, essential upgrades at the Launceston General Hospital and affordable housing programs all have an impact on GST to Tasmania and are treated in the same way as the RHH funding.  It is also the same rule for other states and territories.

The Tasmanian Labor-Green Government, in a recent response to the Commonwealth Grants Commission, accepted that there is no argument for exceptional GST treatment of the RHH redevelopment payments.

The Federal Government has ordered a review of GST amid concerns from richer states like Western Australia that states with larger economies are penalised for economic success, while smaller economies like Tasmania are rewarded for economic underperformance.  It is a perilous time for Tasmania, which does relatively well out of the GST, to be arguing for further special treatment when other states have already labelled it a leach on the national economy.

Mr Wilkie said he understood and shared the concerns of the AMA that elective surgery is being cut and health workers sacked.
 
``But the fact is Tasmania’s dire budget situation is a result of years of financial mismanagement by successive state governments and a smaller pool of GST to be carved up across the nation,’’ he said.

``The fact is the $340m for the RHH has had no impact on current GST receipts and is being used as a red herring to shift blame for the terrible and avoidable situation Tasmania finds itself in today.’’

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