‘Struggle takes time’: NSW treasurer invokes spirit of Gandhi over GST stoush

NSW Treasurer Daniel Mookhey says the state will draw inspiration from Mahatma Gandhi in its quest for a shake-up of GST distribution, saying the Indian freedom fighter had taught him that “struggle takes time, and justice isn’t delivered overnight”.

Mookhey on Wednesday blasted the “absurd” GST carve-up, which will see taxpayers pay almost $53 billion by the end of the decade to prop up a deal with Western Australia that has allowed the resource-rich state to deliver six consecutive surpluses despite massive increases in spending.

NSW Treasurer Daniel Mookhey has hit out at the “absurd” GST carve-up.Credit: Dominic Lorrimer

According to Tuesday’s budget, the cost to taxpayers of a 2018 deal that imposed a floor on WA’s GST receipts and provided for “no worse off” payments to the other states has continued to balloon from an already eye-watering $39.2 billion to $52.9 billion.

At the same time, the NSW budget was dealt a further blow after it was revealed the state will receive $1.9 billion less next financial year than previously forecast. The NSW government had already been preparing to be $1.65 billion worse off in the next financial year after seeing the biggest single-year decline in GST revenue since the tax was introduced in 2000.

NSW’s falling GST revenue follows a surge in thermal coal prices, but the Minns government is also incensed at the cost of the 2018 deal, which was agreed by the former Coalition government.

The deal was signed off on by then-treasurer Scott Morrison to appease WA after its GST receipts fell due to the iron ore boom. It imposed a floor on the value of the GST WA would receive each year but also introduced what became known as the “no worse off” clause to compensate other states by providing top-up payments.

The budget revealed that the expected cost of the GST deal continues to climb due largely to high iron ore prices that buoy the West Australian budget but hurt federal taxpayers. The cost of the deal this year, initially forecast to be $2.4 billion, will now reach $4.9 billion before climbing to $5.2 billion in 2024-25. In 2027-28, federal taxpayers will have to chip in $4.3 billion because of the arrangement.

Mookhey, a vocal critic of the GST carve-up, blasted the deal’s cost, saying it was “further proof about a system that has been absurd since 2018.”

“When the previous federal government entered into this arrangement, they called into question the legitimacy of the entire distribution,” he said.

“In really simple terms, whenever Western Australia has an iron ore boom, they get to keep the majority of it. When NSW and Queensland get coal, we obviously distribute it through the GST. That’s the inequity.”

The Albanese government has kept the arrangements in place after winning a swag of crucial marginal seats in the west at the 2022 election, and on Wednesday federal Treasurer Jim Chalmers reiterated his support for the GST floor, which he said WA had been a “big beneficiary” of.

Premier Chris Minns has called for an overhaul of the GST funding deal and has previously likened WA to a Middle East “petrostate”.Credit: Nick Moir

“There’s a Productivity Commission review in a couple of years’ time. But our commitment to WA is really clear, we want to make sure that you get a fair deal out of the GST,” he told WA media.

“We know that so much wealth and prosperity for our whole country is created out west, and we want to back you in.”

Minns has been calling for GST to be calculated on a per capita basis and has previously criticised the “disadvantage” NSW faces compared to WA, “which is on track to be one of the wealthiest governments in the world on par with the petrostates in the Middle East”.

“As we’ve said repeatedly, the GST distribution system needs to be reformed,” he said.

“NSW has the biggest population, we take an even bigger share of the Commonwealth’s migration intake, so we need our fair share as we rebuild essential services in NSW.”

The premier has found an unlikely ally in former WA premier Colin Barnett, who played a key role in campaigning for changes to the GST carve-up.

Last week Barnett told the National Press Club the GST arrangements were “no longer fit for purpose”, instead calling for a per capita model where states would be funded to 90 per cent of their individual population share. The remaining 10 per cent would be distributed on a needs basis.

The ongoing dispute over the GST carve-up is one of several brewing between the NSW and federal Labor governments, including over education and health. Mookhey has said he is willing to hold off on signing new deals with the Commonwealth until it receives a better funding deal.

Asked by independent MP Mark Latham whether NSW would adopt a position of “non-cooperation” with the Commonwealth, Mookhey quipped the state could take inspiration from Gandhi.

“Like Gandhi taught us all, struggle takes time, and justice isn’t delivered overnight,” Mookhey told question time.

On Wednesday, NSW Health Minister Ryan Park voiced his anger at the GST arrangements and their impact on the NSW budget, saying the fall in revenue would mean “difficult conversations” ahead of the state budget next month.

“We can’t have a situation where Western Australia, with one of the wealthiest governments in the world, continue to get supported to the tune that they do, [and] NSW has to have these difficult conversations,” he said.

While the change will cost NSW the thin budget surplus it had been projecting next financial year, in iron ore-rich WA, the government last week handed down a sixth consecutive surplus despite a nine per cent increase in spending and budget blowouts on major infrastructure projects.

• with Angus Thomson

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