NSW and Victoria are demanding Treasurer Josh Frydenberg re-write the GST rules to cover their massive pandemic spending bill, saying they are out of pocket by as much as $7 billion.
Alex Ellinghausen
Critics claim the 2018 changes, which were enacted in 2020 before the pandemic hit, unfairly favoured the mining-rich state of Western Australia which last year recorded a $5.6 billion budget surplus.But Victoria’s Treasurer, Tim Pallas, and NSW’s Treasurer, Matt Kean, are threatening to increase political pressure on the federal government ahead of the March 29 budget and this year’s federal election. State elections will follow in Victoria later this year and NSW early next year.
They requested the Grants Commission rework its distribution formula to recognise the coronavirus burden the two states were carrying.The Victorian and NSW treasurers said they had spent more than $44 billion and $45 billion respectively responding to the pandemic, including more than $10 billion to support 260,000 Victorian businesses and almost $11 billion to support over 200,000 NSW businesses.
NSW and Victoria take most of the GST – $30 billion and $24 billion respectively – based on the size of their populations, with other states getting a share of contestable GST to deliver services equivalent to NSW or Victoria, whichever is better.
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