Productivity Commission Inquiry into HFE


In April 2017, the Federal Treasurer tasked the Productivity Commission to undertake a public inquiry into the impact on our national economy of Australia’s system of HFE.

The inquiry considered 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; and
  • States' abilities to prepare and deliver annual budgets.

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

More detailed information can be found in the terms of reference (ToR).

In May 2017, the Commission invited interested people and organisations to make a written submission addressing the issues and questions raised in the ToR. In response, in June 2017 the Tasmanian Government made an initial submission to the Commission's guidance note

In October 2017, the Commission released its Draft Report and invited further information and feedback from interested parties. Accordingly, in November 2017, the Tasmanian Government made a submission in response to the Commission's Draft Report, addressing its concerns with the Commission's proposed alternative approaches to HFE​​ and a shift away from a fair and equitable GST distribution system.

In December 2017, the Hon. Peter Gutwein MP made a presentation to the Productivity Commission’s Public Hearing Inquiry into HFE held in Hobart, Tasmania. The presentation, Repsonse to the Productivity Commission Draft report on Horizontal Fiscal Equalisation​, covered a number of key themes and reiterated the importance of a fair and equitable distribution system for all Tasmanians.

In May 2018, the Commission provided its Final Report to the Australian Government and publically released it on the 5 July 2018.

On the same day, the Commonwealth Government releasaed its Interim Response to the Commission's Inquiry into HFE. The Commonwealth's Interim Response accepted all of the Commission's Final Report recommendations, except equalising to the average of all States. Instead, the Commonwealth Government presented an alternative GST distribution method based on an equalisation standard of the greater of New South Wales or Victoria.

View all publications and submissions.

​​ For further information, including submissions from other parties, please visit the Productivity Commission website (


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