Tasmania's slow rate of population growth is causing the state to lose GST, a Legislative Council committee examining the impact of the system of GST distributions on the state's expenses and ability to deliver essential services has heard.
Department of Treasury and Finance representative Fiona Calvert said, although Tasmania's population rate was the highest it had been in a long time, the issue remained because it was slow relative to national growth rates.
States and territories are unevenly distributed GST by the Commonwealth Grants Commission to allow them to deliver an approximately equal level of government services.
Ms Calvert said the expenditure assessments conducted by the CGC were not intended to be a measure of what a state should spend on particular service areas because the Horizontal Fiscal Equalisation system provides untied funding.
"States are tied to their electorate, not the Commission or Commonwealth more generally, as to how GST is spent," Ms Calvert said.
Ms Calvert said there was evidence the CGC's assessment of expenditure differs from actual expenditure, meaning arguments Tasmania is underspending on specific areas, such as health, are erroneous.
Independent health policy analyst Martyn Goddard said the HFE system had the potential to dramatically benefit Tasmania's health system.
Mr Goddard said, although the state was distributed $1.439 billion over the five financial years to 2019 - 20, because the government could spend its share of GST however it pleases this was not invested in health.
"In Tasmania's case, none of the GST money it receives in recognition of this state's above-average health needs is actually being spent on health," he said.