Labor State Leaders Lock Horns Over GST Revenue Allocation

Victorian Treasurer Tim Pallas addresses the media at the University of Melbourne, Australia, on Dec. 4, 2020. (James Ross/AAP Image)

Victorian Treasurer Tim Pallas has traded barbs with New South Wales (NSW) Premier Chris Minns over the latest GST (goods and services tax) revenue distribution.

This comes after Mr. Minns called Victoria a “welfare state” for receiving a much larger share of the GST revenue in the 2024-2025 financial year.

Under the current system, all GST collected by states and territories in Australia is paid to a central pool, and the federal government distributes it to each jurisdiction based on an assessment of their spending needs and revenue-raising ability.

According to the latest GST distribution, Victoria emerged as the biggest winner, raking in an estimated $22.22 billion (US$14.59 billion), up $3.7 billion from the previous year.

In contrast, NSW suffered a $310 million loss in GST revenue, dropping to $24.22 billion, despite being the most populous state in Australia.

Mr. Minns did not believe the distribution was fair to his state, citing the significant rise that other states received.

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“A lot of that money is going to be sent to Western Australia, which is chock full of cash from the mining boom, or down to Victoria, which is now a welfare state receiving a bunch of money from the pockets of NSW families,” he told Sky News.

“NSW just can’t eat last every single time the states get around the table.”

Victorian Treasurer Takes Issues With Minns

During a press conference on March 15, Mr. Pallas claimed the NSW premier got the GST break-up wrong, saying that Mr. Minns might not be “the sharpest tool in the shed.”

“Not a dollar of NSW GST is going to Victoria. Victoria has subsidised other states, not the other way around. We have paid more into the GST pool than we’ve received every year since its inception,” he said.

“If you look at the altered no worse off guarantee process, then that system generates $94.6 billion [worth of GST revenue], and Victoria gets $23.7 billion or 97.4 percent of our payments to the GST. I know there’s a lot of math in this, but put simply, we’re getting less than 100 percent in GST returns.”

The Victorian treasurer also accused NSW of being an infrastructure “welfare recipient” for decades at the expense of Victorian taxpayers.

“We support the idea of horizontal fiscal equalisation that is looking after the poor-performing economies in the nation,” he said.

“We’ll leave it to New South Wales and their Sydney-based mentality to care only about themselves and their welfare and not make a contribution to the rest of the federation.”

Apart from Victoria, Western Australia was another big winner as the state reported a significant increase in GST revenue of $838 million to $7,26 billion in 2024-2025.

The federal government said the above figure was $6.4 billion more than what the state would have received under the previous GST distribution arrangements.

NSW Premier’s Response

Meanwhile, the NSW premier rejected Mr. Pallas’ argument, saying there was a need to reform the GST distribution scheme.

“The only thing worse than Victoria taking our money is them crying about it afterwards,” he said.

“And this is exactly why we have to fix the system and move to a per capita system, where the states, based on population headcount, can get the resources they need to run major metropolises.

“This idea that literally hundreds of billions of dollars is sent to the commonwealth government, it goes into a black box, and a computer spits out a formula–those days have to come to an end. This is public money.”