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12 August 2009

NSW’s largest business organisation has written to Federal Treasurer Wayne Swan expressing its opposition to Commonwealth Grant Commission proposals to strip NSW of almost $2 billion in GST funding over the next three years. 

“If the proposals are accepted, NSW will see $2 billion leave the State and that funding be redirected to the resource rich states of Queensland and Western Australia”, said Stephen Cartwright, CEO of NSW Business Chamber. 

“These proposals by the Commonwealth Grants Commission (CGC) will make the GST formula even more complex, and will result in even greater pressure on NSW during tough economic times. 

“NSW is a $350 billion economy and represents 1/3 of the national economy and yet has an unemployment rate above the national average. A $2 billion cut in the State’s GST allocation will have a significant impact on the capacity of the State to deliver on planned tax cuts and investments in infrastructure”, said Mr Cartwright. 

“We fully support the efforts of the NSW Government in stopping these proposals. 

“The global financial crisis has already reduced the funding base of the NSW Government by $10 billion (over the coming Budget cycle) and NSW cannot afford a further $2 billion cut in funding. Such a cut would put tax cuts, infrastructure spending and the AAA rating under further pressure. 

“We believe that the risk to the NSW Budget is so significant that we would support a State Government campaign against these proposals. Business does not normally support such advertising campaigns but the risk and danger to NSW is so significant that such a program is justified. The last time the NSW Government funded such a campaign against CGC proposals was during the term of the Howard Government. 

“We also call on the NSW Opposition to give complete bipartisan support to the State Government in this endeavour. This is not the time to score points but to support NSW in ensuring the funding base of the NSW Government is preserved”. NSW Business Chamber will discuss its concern about the CGC proposal when it meets with NSW Treasurer Eric Roozendaal tomorrow."