Victoria biggest winner of GST carve-out

Victoria is set to pocket $3.7bn in extra revenue in next year’s GST carve-out, making it the biggest winner — but the huge increase has raised fears the state has turned from a powerhouse to a “poor state”.

Victoria has emerged as the biggest winner of next year’s GST carve-out, with the state to pocket a massive $3.7bn in extra revenue.

But there are concerns fears that Victoria finally getting a share greater than its percentage of population is because it’s turned from a powerhouse to a “poor state”.

The Commonwealth Grants Commission released the 2025-26 distribution on Friday, which shows that Victoria is expected to get about $26.1bn in GST from the $95bn pool.

The huge increase to state coffers is up from $22.5bn in 2024-25 and $18.8bn in 2023-24.

Victoria, which has 25.7 per cent of the nation’s population, will have its share of GST rise to 27.5 per cent.

State Treasurer Jaclyn Symes, who welcomed the commission recommendation, said: “We will use our fairer share of funding to deliver the priorities of Victorians”.

“Our position remains clear – we need to lock in the ‘no worse off guarantee’. Without it, Victoria would be shortchanged by about $1.8bn a year,” Ms Symes said, which takes the state’s total payment to almost $28bn next year.

State Treasurer Jaclyn Symes says ‘we will use our fairer share of funding to deliver the priorities of Victorians’. Picture: Ian Currie

She said the carve-out recognised that the state’s economy and population — which fell during the Covid pandemic — were growing, driving a need for more services and infrastructure.

It also took into account that Victoria spent more on Covid business support, and did not benefit from the boost high coal and iron ore prices had on mining royalties compared to other states.

NSW is set to receive an extra $942m or $25.5bn in 2025-26. Queensland, which saw significant growth in royalties, is the only state that will see its GST distribution fall next year.

The $1.2bn drop to $16.6bn sparked outrage from Queensland Treasurer David Janetzki, who called the distribution “shonky shifting of Queenslanders’ money for a better payout for NSW and Victoria”.

But Ms Symes said the distribution had “never been fair”, with Victoria receiving about $31bn less than its population share since the creation of the GST because it had subsidised other states.

Victorian opposition treasury spokesman James Newbury says the extra GST os a ‘red letter day’ because it confirms structural economic weaknesses. Picture: Luis Enrique Ascui

Victorian opposition treasury spokesman James Newbury said the extra GST was a “red letter day” because it confirmed structural economic weaknesses, with the state shifting from a former “powerhouse of the national economy” to a “national taker of tax revenue”.

“It exposes the state Labor government’s strategy of building a financial plan on population growth and nation leading tax collection as nothing more than a Ponzi scheme,” Mr Newbury said.

Independent economist Saul Eslake said: “Victoria has become a poor state, and so it should be getting a bigger share of GST revenue than its share of the population under the rules”.

“Is Victoria being rewarded for its incompetent management of a pandemic? In a sense they are,” he said.

Mr Eslake also raised concerns that WA was getting $4.9bn more than they should next year, bringing its excess to $30bn since 2019 at the expense of the federal budget.