Queensland demands GST reform as state faces years in the red

Queensland’s LNP government has demanded a bigger slice of the GST pie, as its first budget forecast deficits until at least the next state election.

Premier David Crisafulli said a $2.3 billion cut to Queensland’s GST allocation from the Commonwealth was a “significant kick in the pants” for the state’s budget and a significant driver toward’s the state’s $8.6 billion deficit in 2025-26.

The Commonwealth Grants Commission’s GST allocation will leave Queensland with its lowest-ever share of GST – largely due to the state’s coal royalties, introduced by the former Labor government in 2022, which had reduced its call on the GST pool to cover the provision of services across the state.

Treasurer David Janetzki and Premier David Crisafulli with the 2025-26 state budget papers.Credit: Jamila Filippone

Queensland budget papers show the redistribution of GST revenue away from Queensland meant a $2.29 billion revenue reduction in 2025-26. In the three years to 2027-28, the negative impact on Queensland was estimated to be more than $5 billion.

“There is no way that one state should bear the brunt of what Queensland did in one year,” Crisafulli said on Tuesday.

“It’s just not fair. The fundamentals of the way that the GST is carved up is unfair, where one state can be penalised because of poor performance for others in one year.”

The loss in GST revenue coincided with a significant decline in coal royalties revenue, which Treasurer David Janetzki lamented was on track to effectively halve.

“The former government collected $15 billion in 22-23, $10 billion in 23-24 and now probably, for 24-25, it’ll be a touch under $6 billion,” he said.

“Then across the forwards it’ll flatline to around $5-6 billion per annum.

“[Former Labor treasurer] Cameron Dick collected more in coal royalties in two years than what I’ll collect in four.”

Janetzki said Queensland intended to “have a very loud voice” in a federal review into the GST.

“Queensland has been punished for us seeking out our natural advantages in the advancement of national wealth, and I don’t think we should be penalised for us advancing our state interest and ultimately national wealth in that carve-up,” he said.

“So I intend to have plenty to say about that at the federal Productivity Commission review.”

Despite deficits predicted throughout the four-year forwards, Janetzki said Tuesday’s budget had “laid the pathway to surplus”.

But that came with a caveat.

“That responsible pathway out of these deficits relies on that GST bouncing back,” he said.

Federal Treasurer Jim Chalmers, speaking in Brisbane on Tuesday, kept the door open to GST reform coming out of the planned productivity roundtable in August.

“Inevitably there is, from time to time, tension between the Commonwealth and the states about Commonwealth funding,” he said.

“Every state and territory wants more funding from the Commonwealth. From time to time, they pitch up ideas like this one [GST reform].

“I like to engage with the states and territories in good faith from both sides of the political equation and I hope that at the economic reform roundtable, however we work out the best way to involve the states in this process – whether inside or outside the room – I hope that people come to this in a constructive way and I suspect they will.”

But Chalmers said the prerequisite for reform would be to take a national view.

“Not just a sectoral view or a state or territory view, but to try and see the whole national economic interests, as governments are invited to do,” he said.

“I’ve asked people to make sure that where they are proposing a change, whether it’s in tax or productivity in or in other areas around resilience, that that’s done recognising the trade-offs, particularly the fiscal trade-offs.

“We’ve got to make the budget more sustainable, not less sustainable, so that’s an important guiding principle.”

One notable person to confirm his attendance at the roundtable was federal Deputy Opposition Leader Ted O’Brien, the MP for the Sunshine Coast seat of Fairfax.

“The Coalition will be constructive where we can and critical where we must, and I will engage in a businesslike fashion,” he said.

“The Coalition will hold the government to account every step of the way and won’t be there to rubber stamp a talkfest.

“It’s worth the Treasurer knowing from the outset that I believe rhetoric is no substitute for reform. I want to see honesty in how the government defines the economic problems our nation faces, and I will be looking to tangible outcomes as real measures of success.”

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