‘GST is busted’: call for fairer slices of revenue pie
The country’s most populous state says it’s time to make tax changes as anger grows over a GST cut that will cost it millions of dollars.
Despite being raised from high iron ore royalties, Western Australia’s share of the tax pool has been increased in the latest allocation by the independent Commonwealth Grants Commission, triggering anger from other states.
Despite having 1.5 million more residents, NSW received $1.4 billion less in GST revenue than its neighbor Victoria, out of a national income of $103 billion.
Its share of the GST pool falls to 82 cents on the dollar in 2026/27 from 86 cents in 2025/26 and 92.4 cents in 2023/24.
NSW Finance Minister Daniel Mookhey argues that a fairer approach to income distribution should be built on a per capita basis.
“The current system of apportioning GST is broken. NSW is carrying the federation alone,” he said on Friday.
“The whole federation would be better off if we distributed the GST according to the population share and the federal government used its own balance sheet to support smaller regions.”
The NSW treasurer says his state’s taxpayers are seeing more of their own money being spent to stabilize the budgets of Victoria and WA, which are on track for an eighth consecutive budget surplus.
He noted that if income were apportioned on a per capita basis, the additional $3.2 billion in windfall revenue expected for NSW next financial year would be quite large.
Distribution of GST has historically been decided based on need; This meant that from about 2000 to 2018, resource-rich WA received a lower share per capita than poorer states such as Tasmania.
But an agreement with the then coalition federal government in 2018 meant that for the last two financial years WA could receive no less than 75 cents on the dollar of its receivables on a per capita basis.
WA’s base has risen to the equivalent of NSW’s relative in the 2026/27 spread, coming in at just under 82c.
Mr Mookhey outlines his proposal in a detailed submission to the Productivity Commission on the GST deal ahead of a report scheduled for publication in August.
Federal Finance Minister Jim Chalmers said GST payments were increasing in all states and territories.
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