Conflict Arises Between Labor State Leaders Regarding GST Revenue Distribution
A heated debate has erupted between Victorian Treasurer Tim Pallas and New South Wales (NSW) Premier Chris Minns over the distribution of goods and services tax (GST) revenue. The disagreement stems from Victoria receiving a larger share of GST revenue in the upcoming financial year, leading Mr. Minns to label the state a “welfare state.” However, Mr. Pallas has fired back, stating that NSW has misunderstood the breakdown and accusing the premier of lacking intelligence.
Under the current system, all GST collected by states and territories in Australia is paid into a central pool, which is then distributed by the federal government based on each jurisdiction’s spending needs and revenue-raising ability. In the latest distribution, Victoria emerged as the biggest winner, with an estimated $22.22 billion in GST revenue, while NSW suffered a $310 million loss, dropping to $24.22 billion.
Mr. Minns expressed his dissatisfaction with the distribution, arguing that other states saw significant increases while NSW suffered a loss. He criticized the fact that money was being sent to Western Australia, which already had substantial funds from the mining boom, and to Victoria, which he referred to as a “welfare state” benefiting from the pockets of NSW families.
In response, Mr. Pallas held a press conference on March 15 to address the issue. He claimed that NSW had misunderstood the breakdown of GST revenue and accused Mr. Minns of not being “the sharpest tool in the shed.” Mr. Pallas argued that no GST revenue from NSW was going to Victoria and that Victoria had actually subsidized other states. He highlighted that Victoria had consistently paid more into the GST pool than it received since its inception.
The Victorian treasurer further criticized NSW for being an infrastructure “welfare recipient” for decades at the expense of Victorian taxpayers. He emphasized that Victoria supported the idea of horizontal fiscal equalization, which aims to support poorer-performing economies in the nation. Mr. Pallas concluded by suggesting that NSW’s perspective was limited to Sydney and its own welfare, without considering the contribution to the rest of the federation.
Apart from Victoria, Western Australia also saw a significant increase in GST revenue, reporting an additional $838 million to reach $7.26 billion in the 2024-2025 financial year. The federal government noted that this amount was $6.4 billion more than what the state would have received under previous GST distribution arrangements.
In response to Mr. Pallas’ remarks, Premier Minns rejected his arguments and called for a reform of the GST distribution scheme. He criticized Victoria for complaining about receiving money from NSW and emphasized the need for a per capita system, where states receive resources based on their population count. Mr. Minns argued that the current system, where money is sent to the central government and distributed through a formula, should come to an end as it involves public money.
The conflict between the two Labor state leaders highlights the ongoing challenges surrounding GST revenue distribution in Australia. The differing perspectives on fairness and the need for reform demonstrate the complexities of balancing fiscal equalization and the economic realities faced by different states. As the debate continues, it remains to be seen if a consensus can be reached to address the concerns raised by both Victoria and NSW.
