The economic damage from Melbourne's prolonged COVID-19 lockdown has reignited a tussle over the distribution of the $63 billion goods and services tax, after the Commonwealth Grants Commission raised the potential of Victoria being "compensated" by other states.
But the grants commission has also warned there could be a "moral hazard" if other states and territories were forced to give up GST revenue to Victoria, which is forecast to suffer a bigger fall in tax revenue and higher spending in response to the COVID-19-recession.
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John Kehoe is economics editor at Parliament House, Canberra. He writes on economics, politics and business. John was Washington correspondent covering Donald Trump’s first election. He joined the Financial Review in 2008 from Treasury. Connect with John on Twitter. Email John at jkehoe@afr.com
