NSW the Covid load-bearing state deserves fairer share of GST: Treasurer Matt Kean

NSW Treasurer Matt Kean has penned a second letter to his federal counterpart calling for a fairer share of the GST pie in light of Covid’s impact on the state.

NSW faces being “short changed” after carrying the nation during the Covid-19 pandemic, with the state facing a $2 billion black hole if the federal government does not carve up the federal GST pie more fairly.

Treasurer Matt Kean has written to his federal counterpart Jim Chalmers for the second time urging him to divvy up GST distributions — the amount of funding a state gets back from the Commonwealth from its GST payments — with consideration to the heavy load NSW had to bear during the pandemic.

This included taking the vast majority of returned travellers into hotel quarantine, as well as extending support payments to businesses across the nation’s most populous state.

Analysis by NSW Treasury of the Commonwealth Grants Commission figures shows the estimated impact of Covid-19 on NSW has been understated by $715 million a year – adding up to more than $2b over the next three years.

Mr Kean wrote to Mr Chalmers ahead of the budget calling on the Commonwealth to take Covid impacts into account when distributing GST revenue.

NSW Treasurer Matt Kean is calling on federal counterpart Jim Chalmers to divvy up the GST differently. Picture: NCA Newswire / Gaye Gerard

He said this should be done the same way natural disasters are considered with the payments.

“NSW taxpayers are at risk of missing out on more than $2 billion over the next three years because of the way GST revenue is divided up between the states,” Mr Kean said.

“The Commonwealth Grants Commission acknowledges the system can be fairer; it just needs the nod from Treasurer Jim Chalmers.

“The same way natural disasters are taken into account when distributing GST, so should the impacts of Covid to ensure that NSW isn’t short-changed after carrying the nation during the pandemic.”

Meanwhile, fears are growing Tuesday’s federal budget will wipe out a slew of funding commitments for the bush, with the NSW Government drawing up a list of major highway upgrades, dam projects and even a renewable energy hub set for the chopping block in Labor’s belt-tightening budget.

NSW Deputy Premier Paul Toole has also written to Federal Treasurer Jim Chalmers requesting clarity on what projects could be hit when the budget is unveiled on Tuesday, but is yet to receive a response.

Deputy Premier Paul Toole has accused the Treasurer of “softening up” the regions while “sharpening the axe” against them. Picture: NCA NewsWire / Damian Shaw

“If funding is cut to regional NSW projects, this will have a detrimental impact on so many communities resulting in cancelled projects and potential job losses,” Mr Toole wrote to the Treasurer in a letter seen by The Daily Telegraph.

While Labor has announced it would pump $1 billion of federal funding into NSW infrastructure in the budget, $500m is set to go to high-speed rail work between Newcastle and Sydney, with another $300m to go towards a western Sydney roads package.

Previous prime minister Scott Morrison announcing the Sydney-Newcastle high-speed rail project. Picture: Afam Taylor

Mr Toole accused Federal Treasurer Jim Chalmers of “trying to soften up regional communities as he sharpens the axe to slash regional infrastructure funding” next week, adding the “Albanese government cannot be allowed to destroy the regions to repair the budget bottom line”.

Mr Albanese last week refused to commit to funding the Wyangala Dam wall raising, despite floods hitting the central west region for the second time in a year, with fears other projects west of the Blue Mountains will get the chop too.

Among the list of projects committed to – but not yet contracted out – which the NSW Government fears will be dropped include the building of a new dam in Dungowan, major upgrades of the Newell, Great Western and Barton Highways, as well as the construction of a renewable energy hydrogen hub at the Port of Newcastle.

There are concerns the raising of Wyangala Dam’s wall could get the chop. Picture: Brook Mitchell/Getty Images

A spokesman for infrastructure and regional development Minister Catherine King refused to confirm what funding would be chipped in for a list of major regional NSW projects, stating: “Details of the Australian Government’s investments will be confirmed in next week’s budget”.

“We are working in partnership with the NSW Government on the investments that deliver the best value for taxpayers’ dollars and the best outcomes for the people of NSW,” the spokesman said.

“(The Minister) has refused to confirm which projects are for the chopping block, instead telling regional communities to wait until budget night on Tuesday to learn the fate of those projects,” Mr Toole said.

Originally published as NSW the Covid load-bearing state deserves fairer share of GST: Treasurer Matt Kean