NSW could be $4.7bn better off if federal funding was determined by population

The NSW government has crunched the numbers and found Canberra’s GST carve up has cost the state the equivalent of 10,000 police and 10,000 nurses.

• Albo using NSW’s GST riches to shore up seats

The state government would get an extra $434 in GST for each person in NSW if the tax revenue was carved up based on population size alone, delivering a $3.6bn cash injection to pay for schools, roads and hospitals.

Junking the arcane GST distribution formula that favours WA and delivered billions of dollars to Victoria in favour of a per capita distribution would deliver NSW a windfall that could pay for 10,000 more police officers and 10,000 additional nurses.

According to figures crunched by the state government, NSW would get more than a billion dollars more in other sources of federal funding if Canberra divvied out its funds based on population size.

If other Commonwealth-state funding agreements were based on a proportional funding model, NSW would $590m more in health funding, which could build more hospitals or pay for 1,000 extra nurses over four years.

We could get $346m in funding for schools, and $160m more for housing.

Treasurer Daniel Mookhey has been calling for states to get GST funding based on population size. Picture: NCA NewsWire / Nikki Short

Overall, a lack of proportional funding is short-changing NSW by almost $4.7bn, according to the state government figures.

If the GST was carved up based on population, NSW would get $3272 per person. According to little-known Commonwealth Grants Commission, NSW will get $2838 per person next year under the current scheme.

The Minns government is now heaping pressure on Canberra to make up $1.65bn in lost revenue, calling for the federal government to make up the cash elsewhere.

At a meeting of state Finance ministers on Friday, Treasurer Daniel Mookhey told his federal counterpart Jim Chalmers that NSW will have no way to contribute more money to the National Disability Insurance Scheme.

Mr Mookhey told federal Treasurer Jim Chalmers last week that NSW could not help fund NDIS reforms without getting more money from Canberra. Picture: NCA NewsWire

“NSW’s capacity to support the Commonwealth when it comes to key reforms like in the NDIS and elsewhere is elsewhere seriously in jeopardy now as a result of the Commonwealth Grants Commission’s decision,” Mr Mookhey said on Tuesday.

“When we lose $1.65bn at the same time as we are trying to repair our own state’s balance sheet and improve our own operating result, we don’t have spare change lying around to help the Commonwealth meet its responsibilities,” Mr Mookhey said.

Mr Minns wants funding allocations for infrastructure revisited. Picture: NCA NewsWire

While the GST carve up for next financial year is final and cannot be changed, the state Government has been pressuring Canberra to provide NSW with more funding in direct funding agreements.

“We accept the fact that GST reform is not imminent, but there is a great capacity for us now to reach a good resolution when it comes to schools, when it comes to hospitals, when it comes to housing, when it comes to infrastructure,” Mr Mookhey said.

Writing in The Daily Telegraph on Tuesday, Mr Mookhey called for the CGC has called for the CGC to tell states what they can expect “for the next four years” to give more certainty.

He has also called for an initial “draft ruling” that can be appealed, and for the CGC to “require all states to tell each other what it costs to deliver the same service so we can all keep each other honest”.

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