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An update to the Goods and Services Tax (GST) carve up has left one state losing $1.2 billion in public funds compared to last year, while every other jurisdiction is set to get a financial boost.
The recommendations come as the Commonwealth Grants Commission handed down its latest report into how $95.2 billion in GST proceeds will be divided up in the new financial year.
The GST is a broad-based tax of 10 per cent on most goods, services and other items sold or consumed in Australia, which was introduced in the year 2000.
The distribution of revenue from the GST is recalculated each year, with a per capita share paid to states and territories based on their relative need and ability to raise revenue.
Each year the funding announcement prompts anger from state premiers and treasurers who argue smaller states are being propped up with cash from larger states.
Victorians are the big winners from the latest carve-up of GST revenue, but their gains will come at the expense of Queenslanders.
Struggling state economy
Victoria emerges as the greatest beneficiary of the GST distribution, gaining almost $3.9 billion on last year, due to its booming population and struggling economy.
In total, the state will receive 28 per cent of all GST funds, including ‘no worse off’ payments, totalling almost $28 billion.
Its take has “increased substantially” after the commission altered its method for assessing pandemic-era health and business support costs.
It’s also the first time Victoria has become a net beneficiary of GST rather than a net contributor.
‘No worse off’ payments are transitional top up payments in force while new arrangements are made for distributing GST.
They ensure that no jurisdictions receive less money than they would have received under the previous arrangements.
Mining boom
Queensland has emerged as the biggest loser of the annual allotment.
Its GST take will be slashed by $2.4 billion to a total of $16.6 billion for the 2025-26 financial year as the state’s budget benefits from increased coal royalties.
It will be the only jurisdiction to receive less GST in 2025-26 than it did the year before.
Commonwealth Grants Commission chair Mike Callaghan said: “Queensland has had the largest amount of coking coal,” he told AAP.
“If a state has a growth in revenue, it doesn’t need as much as GST distributed.”
But Queensland Treasurer David Janetzki said the state was not getting its fair share of the money.
He said: “This recommendation would severely compromise Queensland’s capacity to deliver essential services and infrastructure for our growing state.
“This must be called out for what it is, shonky shifting of Queenslanders’ money for a better payout for New South Wales and Victoria.”
NSW will gain a further $942 million to its coffers, with WA also getting $395 million extra for 2025/26.
— With additional reporting from Australian Associated Press
