Solution: NSW treasurer Mike Baird believes GST on online shopping holds the key to offsetting the Gonski bill. Photo: Jim RiceUnpopular cuts in this week’s state budget designed to pay for the $5 billion Gonski education deal would be unnecessary if the federal government started charging GST on more online shopping, according to NSW Treasurer Mike Baird.
As the Gillard government ups the cash on offer to lure other states and territories to sign up to federal Labor’s national education overhaul, Tuesday’s budget will commit NSW to spending an extra $477 million for disadvantaged students over the first four years of Gonski, to be complemented by an extra $888 million from the Commonwealth.
The budget will reveal the O’Farrell government’s funding timeline for Gonski, with a $26 million boost for students with higher needs coming next financial year, matched by $50 million from the Commonwealth.
This increases to $80 million in the second year, with $150 million from the Commonwealth.
The bulk of the money promised by NSW – or $1.28 billion of a total $1.76 billion – will be delayed until the final two years of the Gonski deal, in 2017-19.
The savings measures to pay for the schools’ boost will hit business, TAFE and the public sector through an efficiency dividend.
But the budget document says if the federal government moved to plug leakage of GST revenue, caused by more consumers abandoning traditional retailers and shopping online, some Gonski savings measures could be wound back.
An estimated $2.5 billion would be saved nationally.
“The reality is that the NSW commitment of $1.7 billion meant some additional tough decisions, in what is already a difficult environment for the state budget. The entire cabinet made those tough choices, because we believe they are the right choices and in the best interest of NSW students, parents and teachers,” Mr Baird said. The business community is upset with the O’Farrell government that an earlier promise to remove some taxes will be broken.
But Mr Baird said if the federal government agreed to lower the $1000 GST-free threshold for online purchases, he could ease the Gonski hit on business sooner.
”The low-value threshold loophole means states are losing out on up to $2.5 billion in essential revenue over the next three years so we will continue to campaign aggressively for this,” he said.
A spokesman for federal assistant treasurer David Bradbury said halving the GST-free threshold to $500 would impact on millions of parcels being sent through the mail, and may cost more to administer than the extra tax revenue collected.
Customs and federal Treasury will report in the second half of this year on the impact of lowering the GST threshold for online purchases.
With a June 30 deadline to sign up for Gonski or lose the extra funding, South Australia on Friday joined NSW and the ACT in agreeing to the education reforms.
There is speculation Victoria may also sign if offered more money. Queensland and Western Australia are hostile to the reforms, while Tasmania has indicated a reluctance to sign by June 30.
The federal Coalition has reaffirmed that it will repeal the Gonski legislation before the scheme’s January 2014 start date if it wins government in the September election, unless an ”overwhelming” majority of states sign on.
Federal opposition education spokesman Christopher Pyne said yesterday: ”An overwhelming majority means most states and territories signing up. Currently the government only has three out of eight jurisdictions, which isn’t even a majority.”
The federal government’s move to boost the cash on offer to Western Australia prompted Mr O’Farrell to question whether NSW, which was the first to sign and has a ”no disadvantage” clause, had missed out on the best funding outcome.
A spokesman for NSW Education Minister Adrian Piccoli said: ”Our advice is that the latest funding offers do not breach our agreement.”
NSW will get $3.3 billion in extra funding from the Commonwealth under its deal, to be spent on students with higher needs because of socio-economic disadvantage, location, language or disability. Base funding for all students will additionally rise by a minimum of 3 per cent each year.
Although school funding will rise under Gonski, funding to TAFE and the vocational education sector will be cut by the O’Farrell government.
The budget will extend the first home buyer’s grant of $15,000 by another two years. The grant was due to drop to $10,000 next year.
The original release of this article first appeared on the website of Hangzhou Night Net.