The Minns government will take a leaf out of former West Australian premier Mark McGowan’s playbook and begin a full-scale campaign for changes to GST distribution unless Prime Minister Anthony Albanese addresses NSW’s growing list of grievances with the Commonwealth.
NSW Premier Chris Minns launched a furious attack on the Commonwealth after the latest GST carve-up left NSW $1.65 billion worse off than the state had expected, demanding an explanation on the cuts from the prime minister and calling for an overhaul of the “opaque” distribution model.
NSW Premier Chris Minns, who has complained about the latest GST carve-up, and Prime Minister Anthony Albanese in a file picture.Credit: Alex Ellinghausen
In the WA campaign, there was a bipartisan push from politicians there – including federal MPs – to overhaul the tax, which heaped pressure on the Commonwealth to increase the state’s funding share.
The blow-up this week has sparked the most substantial rift between the Labor governments after they butted heads on the Commonwealth government’s cuts to infrastructure funding in NSW and an as-yet unresolved dispute over education funding.
Both Minns and NSW Treasurer Daniel Mookhey on Thursday called for a complete overhaul of the way GST revenue is divided between states, labelling the system broken and arguing for a per-capita model, which they estimate would funnel an additional $3.6 billion into NSW.
“Which means, in personal terms, I could employ an extra 10,000 police and 10,000 nurses both. That’s a huge amount of money,” Minns told Sky News.
“I think the fundamental problem is that this should be far, far simpler, and way more transparent to the people who actually send their cash to the federal government. The easiest way of doing it is to distribute the funds per-capita based on population size.”
These complaints were given short-shrift by the prime minister on Thursday. Speaking in Sydney, Albanese insisted the agency responsible for calculating GST contributions — the Commonwealth Grants Commissions — was independent of government and he took a swipe at Mookhey after he said the system was broken.
“I recognise the NSW treasurer is new to his job – but the system has been there for a very long time,” Albanese said. “We have not changed the system. Every year, there is a debate about this. Every year. This is not anything new.”
Debate over GST allocation has increased since the former Turnbull government agreed to a special deal with Western Australia in 2018, which allows the state to receive a guaranteed share of GST despite also benefiting from a boom in iron ore prices.
The extra funding delivered to WA is expected to cost taxpayers $50 billion by the end of the decade because of “no worse off” provisions, which mean other states receive a top-up in funding to maintain their share of GST revenue.
The deal, designed by then-treasurer Scott Morrison, came after WA mounted a concerted campaign to arrest the falling share of GST revenue it had received on the back of the iron ore boom.
The anger over the GST carve-up — as well as a growing list of other funding disputes between the two states – have triggered senior figures in the Minns government to prepare their own WA-style campaign unless the Commonwealth agrees to changes to the way funding is distributed.
On Thursday, Minns said NSW “can’t eat last every single time the states get around the table”.
“In 2018, the system was changed, as a result that if the previous regime was in place, we would have got 94¢ in the dollar,” he told Sky News.
“Now we’re looking at a situation where we’re gonna get 86¢ in the dollar. And a lot of that money is going to be sent to Western Australia, which is chock full of cash from the mining boom, or down to Victoria, which is now a welfare state receiving a whole bunch of money from the pockets
of NSW families.
“We can’t just throw our hands in the air and say, ‘Oh, well, that’s the way it’s always been done. We’re not going to change anything.’ Western Australia didn’t do that a few years ago. And I’m signalling that NSW isn’t either.”
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