NSW Treasurer Daniel Mookhey reignites GST war, slams WA deal as 'ridiculous' as federal government refuses changes
Mr Mookhey slammed the multi-billion-dollar deal which guarantees WA a minimum share of GST as 'ridiculous' and said NSW was paying the price.
Speaking at a Business NSW pre-budget breakfast, Mr Mookhey revealed that NSW would receive its lowest share of GST revenue in 25 years in the 2025-26 budget.
'Yes, I'm still very sore about the $12.6 billion that was taken from New South Wales last year in GST,' Mr Mookhey said on Tuesday.
'When we give the budget in two weeks time, people will see that New South Wales will receive its lowest share of GST in the 25 years since it was introduced.'
The NSW Treasurer accused WA of benefiting from a system which allowed it to deliver superior services while keeping state taxes low, at the expense of larger eastern states.
'There are now really two states—well, two and a bit really—that are propping up the federation when it comes to GST distributions,' he said.
'It's now us, it's now Queensland ... technically WA donates, but I wouldn't necessarily recognise it as a fair arrangement."
Mr Mookhey said when he became NSW Treasurer, NSW was receiving 93 cents per dollar of GST raised compared to 96 cents for Victoria.
Those figures had changed to 85 cents for NSW and $1.07 for Victoria.
The remarks come amid deepening frustration from eastern states about the 2018 deal which guarantees WA at least 75 cents for every dollar of GST raised in the state.
That guarantee—set to continue until at least 2029-30—was struck by the Morrison government and locked in under the Albanese government.
'Right now, it's ridiculous that when a place like Stanmore Park is classified as a major city, we lose GST,' Mr Mookhey said.
'It was a surprise for them to wake up in the morning and find out that they're bigger than Darwin for the purpose of GST allocation. It's ridiculous.'
Despite the growing backlash, Prime Minister Anthony Albanese has reaffirmed his commitment to the existing WA GST deal.
'We support the position on WA that I took to the election, that I took the 2022 election, and that we're enshrined at the National Cabinet,' Mr Albanese said last Tuesday.
The deal, originally set to expire in 2026-27, was recently extended as part of a broader funding agreement on the National Disability Insurance Scheme (NDIS).
Independent economist Saul Eslake has been scathing in his criticism of the GST carve-up, describing it as the 'worst public policy decision of the 21st century'.
'The 'WA GST deal' which Albanese champions means that residents of Australia's richest state, WA, will get better public services whilst paying lower state taxes,' he said.
'It is giving WA $7 billion in 2025-26, and at least $8 billion per annum in 2026-27 through 2029-30.'
Another major concern has been the cost of the deal blowing out from $9 billion over eight years to almost $60 billion over 11 years.
'That's the biggest blow-out in the cost of any single policy decision, ever, with the possible exception of the NDIS, which was at least for a noble purpose,' Mr Eslake said.
He also criticised both major parties for entrenching the deal, saying bipartisan support was needed to unwind it and restore fairness to the system.
Any hope of bipartisan change was quashed last week when the Coalition's economic team confirmed it would not propose any changes to the current GST formula.
'The Coalition will not be proposing changes to the current GST settings with respect to Western Australia,' Shadow treasurer Ted O'Brien and shadow finance minister James Paterson said in a joint statement to Sky News.
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