Regional NSW towns Kiama, Stanwell Park rebranded as ‘major cities’ in GST stuff up

The organisation responsible for carving up Australia’s GST has dudded NSW by half a billion dollars using a “weird” method that rebranded some of NSW’s most quaint towns as “major cities”.

NSW’s sleepy coastal escapes and regional townships have been rebranded as “major cities” with the decision costing the state half a billion dollars in lost GST revenue.

It comes amid an escalating revolt against the GST distribution method with one leading economist urging Treasurer Jim Chalmers to fast-track a major review into the system.

While the Commission’s latest report acknowledges Coffs Harbour was reclassified from an outer regional town to an inner regional town, The Daily Telegraph can reveal that four other towns were also reclassified from inner regional to major cities, according to analysis from NSW Treasury.

In the 2021 Census, the Australian Bureau of Statistics rebranded south coast town Kiama, affluent Illawarra suburb Stanwell Park, Cessnock in the Hunter Valley and Queanbeyan township Googong from inner regional Australia to major cities.

According to NSW Treasurer Daniel Mookhey, the Commonwealth Grants Commission has used these reclassifications to rob NSW of millions of dollars in our share of GST in the latest carve up.

Stanwell Park has been branded a major city.

GST funds are distributed by factoring in the revenue raised by each state as well as the costs incurred for service delivery, with states that have more regional towns getting a higher share of the fund to offset the greater cost of offering services away from the big city.

NSW Treasurer Daniel Mookhey. Picture: Nikki Short

Kiama’s population jumped from 13,453 in 2016 to 14,761 in 2021 — a minuscule jump that NSW Treasurer Daniel Mookhey said does not justify the lost millions in revenue.

“According to the Commonwealth Grants Commission, on Monday everyone in Kiama, Cessnock, Stanwell Park and Googong went to bed in a regional town and woke up in a major city,” he said.

“Weird changes like this have ended up costing NSW half a billion dollars.”

Kiama has been reclassified as a “major city”.

Kiama mayor Neil Reily said the classification failed to acknowledge the challenges his town faces and described the GST system as “arbitrary”.

“It is a regional area and that’s the basis on which the council was established,” he said.

“Regional towns face a lot of discrimination and I think it’s difficult for us to achieve some of the things the big cities can.”

“It’s got to do with the tyranny of distance from the city as well as difficulties and shortages that happen in regional areas.

“In terms of the reclassification, I don’t think it’s appropriate. A lot of these things are very arbitrary and made up.”

In Stanwell Park, the population jumped from 1410 people in 2016 to 1713 people in 2021 while in Cessnock it went from 21,725 to 23,211.

The biggest jump was in Googong where the population rose from 1524 in 2016 to 6224 five years later.

Economist Saul Eslake has been a leading critic of the GST distribution method and urged Treasurer Jim Chalmers to call a Productivity Commission inquiry — due by 2026 — as early as in the coming months.

“You need a Productivity Commission inquiry with sufficient time and 18 months would be enough. Jim Chalmers has a choice. (he should call it) in the next few months,” he said.

“There has to be a productivity commission inquiry into the system by 2026 — I hope they are given terms of reference and sufficient times that allow it to give a different way of achieving the same objective in a much more simple, transparent and predictable way.”

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