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Review by the Secretary

The sole outcome of the Commonwealth Grants Commission (CGC) — as set out in its Portfolio Budget Statements 2019–20 — is to inform government decisions on the distribution of the goods and services tax (GST) so that horizontal fiscal equalisation (HFE) among the states and territories[1] is achieved.

The Commission continued work on its review of the methods used to calculate the per capita relativities to distribute the GST among the states from 2020–21 (2020 Review). This involved continued engagement with state treasuries and other interested parties. The CGC presented the Report on GST Revenue Sharing Relativities 2020 Review to the Treasurer and the states on 28 February 2020, and the report was publicly released on 16 March 2020.

The recommended GST revenue sharing relativities for the 2020–21 financial year were developed using the 2020 Review methods. The Treasurer accepted the recommendations and on 1 April 2020 determined that those relativities would be used to distribute GST revenue among the States in 2020–21.

After the release of the 2020 Review final report, the CGC sought feedback from states on the conduct of the review process and in June published on the website a summary of the feedback and a response. At the same time, staff initiated consultations with states on some of the major new issues for the 2021 Update inquiry, in particular possible ramifications of the COVID-19 pandemic, and the commencement of the legislated transition to the new GST distribution arrangements.[2]

Commission staff also completed a review into Norfolk Island finances, undertaken at the request of the Department of Infrastructure, Transport, Regional Development and Communications. The final report was provided to that department in November 2019.

The CGC used funding secured in 2018–19 to begin a transformation of its ICT systems and a program to upgrade cybersecurity. The move to cloud-based systems put the organisation on a good footing to respond to the increased need, from March 2020, for remote working that arose as part of the response to the COVID-19 pandemic. These changes greatly improved consultation processes with key stakeholders.

(signed) Michael Willcock

[1] In this report, the word ’state(s)’ includes the Australian Capital Territory and the Northern Territory, unless the context indicates otherwise.

[2] Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Act 2018, available at https://www.legislation.gov.au/Details/C2018A00143