The Productivity Commissions has been asked by the Government to undertake an inquiry into Australia’s system of horizontal fiscal equalisation (HFE), which underpins the distribution of GST revenue to the States and Territories (States).

The inquiry is to consider the influence the current system of HFE has on productivity, efficiency and economic growth, including the:

  • movement of capital and labour across state borders
  • incentives for the States to undertake fiscal (expense and revenue) reforms that improve the operation of their own jurisdictions
  • States’ abilities to prepare and deliver annual budgets.

The inquiry is to also consider whether there are preferable alternatives to the current system and the implications for equity across jurisdictions, efficiency and simplicity.

The commission invites interested people and organisations to make submissions.

Further information is available here.

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