Treasurer David Janetzki doubled down on calls to overhaul the GST national distribution methodology, claiming the latest carve-up once again “dudded” Queensland.
The state will receive the largest dollar increase in Australia of $1.7 billion in 2026-27, but Janetzki said this headline gain was an insufficient share of the growing national pool and comes after $2.3 billion was cut from Queensland in the last distribution.
The independent Commonwealth Grants Commission, which oversees how the $103 billion GST pot is allocated, said each state and territory will receive more GST in 2026-27 than the previous year due to forecast growth in overall GST revenue.
But pressure is mounting on the federal government to change how GST is split among the states after NSW also responded furiously to it pocketing $1.5 billion less than Victoria, despite having about 1.5 million more people.
Western Australia is a big winner from the latest distribution; its share will rise from 8.3 per cent to 9.1 per cent, even though it is the strongest state financially.
Janetzki dismissed the headline rise, noting that while the national GST pool had increased by 20 per cent in the last three years, Queensland was the only jurisdiction allocated less this round than 2023-24.
“Queensland has been dudded again by Canberra,” Janetzki said.
“Queensland should be getting its fair share of the GST pie, not playing second-fiddle to a second-rate distribution model designed to dud us.”
Janetzki, who wrote to fellow Queenslander and federal counterpart Jim Chalmers in May last year to voice concerns about the distribution methodology, has led calls nationally for the federal Productivity Commission to review how GST revenue is shared.
On Friday, the Queensland treasurer said the state’s share was growing less than others despite recording the highest net interstate migration, having critical services stretched across the decentralised population, and contributing significantly to the national economy.
“States should not be penalised for their continued contribution to industries that drive national wealth, yet, under the existing GST distribution methodology, that’s what’s happening,” Janetzki said.
“The federal 2026 Productivity Commission inquiry is an opportunity to restore fairness to Australia’s system of horizontal fiscal equalisation, and we’re calling on the Albanese government to restore our fair share of GST.”
NSW’s share of the GST will fall to only 25.5 per cent of the national pool, despite the state having about 31 per cent of the Australian population.
The commission said one reason for the decreased share was “above-average growth in land values” in NSW, which meant it has the capacity to raise more land tax revenue relative to other states. NSW also spent less on natural disaster relief than it had previously estimated.
Victoria’s share of GST fell slightly, but it will still receive $1.5 billion more in 2026-27 than the previous year.
Victoria’s allocation for the coming year ($27.9 billion) will be about $1.7 billion more than NSW ($26.2 billion), despite its lower population.
The GST is the biggest single source of revenue for state governments, meaning the Commonwealth’s distribution of the tax has a major bearing on state budget balances.
How the GST is carved up
- When the GST was introduced in 2000, then-prime minister John Howard promised all of it would be shared among the states and territories. How it was allocated would be decided by the long-standing Commonwealth Grants Commission.
- Every year, the commission examines how much money each state and territory needs to deliver an “average” level of service to its residents, from education to policing.
- This is affected by a large range of factors, including population growth, mineral royalties and social factors such as Indigenous and remote populations.
- The commission recommends to the federal treasurer how the GST should be shared. No treasurer has ever overruled the commission’s findings.
- In 2019, amid fears that WA could end up with a very low portion of the GST, the Morrison government put in place a system that would guarantee its share while also injecting extra funds into the GST pool to ensure no other state or territory would be worse off.
The commission uses a complex method to determine how the GST pool should be divided between the states. It aims to ensure all states have an equal capacity to provide services to their populations. Small states traditionally receive more GST per head of population than larger states.
However, economists have criticised the commission’s GST distribution method for being overly complicated and lacking in transparency.
A deal struck by the Morrison government to protect Western Australia’s share of GST, which had plummeted due to soaring iron ore prices in the 2010s, has also drawn fire from budget experts.
That overhaul in 2019 significantly changed how the GST was divided and required the introduction of a “no worse off” provision for the states, which has cost federal taxpayers tens of billions.
Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.
James Hall is the News Director at the Brisbane Times. He is the former Queensland correspondent at The Australian Financial Review and has reported for a range of mastheads across the country, specialising on political and finance reporting.Connect via X or email.
Matt Wade is a senior economics writer at The Sydney Morning Herald.Connect via X or email.From our partners
Read the full article here
