RAJ REPORT

Does North Queensland get a fair horizontal fiscal imbalance in GST distribution——When the Commonwealth transfers funds to states, it does not give each state a fixed amount or an amount proportional to the state’s population relative to other states. Rather, it uses a formula to disburse funds according to which states need it most based on need and ability to raise own-revenue.

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Australia also has a horizontal fiscal imbalance which arises because state and territory governments have different abilities to raise funds from their tax bases and because their respective costs of providing public services differ. This imbalance is addressed by a horizontal fiscal equalisation (HFE) policy overseen by the Commonwealth Grants Commission. When the Commonwealth transfers funds to states, it does not give each state a fixed amount or an amount proportional to the state’s population relative to other states. Rather, it uses a formula to disburse funds according to which states need it most based on need and ability to raise own-revenue.

 

Fiscal imbalance in Australia – Wikipedia, the free encyclopedia.

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