'He is a tool': GST war escalates as states trade barbs

An internal Labor bun fight over the annual GST carve-up has escalated as Victoria’s treasurer branded the NSW premier a “tool” in response to claims Australia’s most populous state is being short-changed.

The Commonwealth Grants Commission on Tuesday announced the recommended 2024/25 GST distribution, with the national take estimated to grow to $89 billion from about $85 billion in 2023/24.

Under the distribution, NSW and Queensland’s share of the GST pool will fall because rising coal royalties have put them in stronger budgetary positions.

Victoria will get nearly $3.7 billion more than in 2023/24, while NSW will have to make do with $310 million less.

The carve-up has led to a civil war between the Labor states, with NSW Premier Chris Minns on Thursday describing Victoria as a welfare state taking “money from the pockets of NSW families”.

Victorian Treasurer Tim Pallas returned fire on Friday, saying not a single dollar of NSW GST was headed south of the border and calling Mr Minns “mathematically challenged”.

“He might not be the sharpest tool in the shed but he is a tool,” he told reporters in Melbourne.

“He has totally got the GST break-up wrong.”

Referencing Mr Minns’ “welfare state” barb, Mr Pallas suggested NSW had been an infrastructure “welfare recipient” from the Commonwealth at Victoria’s expense for decades.

“It’s just so Sydney of the premier of NSW to scream outrage about the fact we’re coming close to getting a reasonable GST share and bemoan Melbourne’s success,” Mr Pallas added.

“It demeans him, it belittles his state.”

But the NSW premier doubled down with his criticism, repeatedly questioning whether the unfavourable carve-up was “planned or accidental”, and saying the entire GST system needed fixing.

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

Mr Minns has called for GST to be split on a per-capita basis, with additional funds distributed via grants to states and territories that needed further support.

Such a system would benefit the larger states, which receive less in GST per resident than they raise, but would lead to South Australia, Tasmania, the ACT and Northern Territory pocketing less.

“When the states sit down to eat, NSW can’t eat last every single time,” Mr Minns said.

“This is public money, it’s not government money, it’s owned by the people of Australia and it should be distributed in a fair way.”

But the idea was quickly shot down by Mr Pallas.

“It really just drips of entitlement and selfishness,” he said, adding Victoria remained committed to ceding some of its GST revenue to poorer states.

The war of words came ahead of a virtual meeting between state and federal treasurers on Friday when NSW Treasurer Daniel Mookhey formally pitched moving to a per-capita GST formula to eliminate wild fluctuations, with the federal government picking up the slack to compensate smaller states.

“A system this absurd cannot last,” he said in a statement.

“It is not set in stone and it is time for it to change.”

Prime Minister Anthony Albanese earlier deflected when asked to rule out changing the system to redistributed GST based on population size.

“Every year there is some criticism of the process, but it’s at arm’s length from government,” he told Adelaide radio station FiveAA.

Deputy opposition leader Sussan Ley labelled the GST fight “blokey” and urged state leaders to have constructive talks.

“This is all sounding a bit shouty and loud and I would suggest to the Labor leaders that maybe they dial down the testosterone,” she said.