Despite cashing in from high iron ore royalties, Western Australia's share of the tax pool was increased in the independent Commonwealth Grants Commission's latest carve-up, triggering the ire of other states.
NSW received $1.4 billion less GST revenue from the $103 billion national pot than its neighbour Victoria, despite having 1.5 million more residents.
Its share of the GST pool has now fallen to 82 cents in the dollar in 2026/27, down from 86 cents in 2025/26, and 92.4 cents in 2023/24.
NSW Treasurer Daniel Mookhey argues a fairer approach to revenue distribution should be built on a per capita basis.
"The current system for carving up the GST is busted. NSW carries the federation all by itself," he said on Friday.
"The whole of the federation would be better off if we allocated the GST by population share, with the federal government using their balance sheet to prop up the smaller jurisdictions."
The NSW treasurer said his state's taxpayers had seen more of their money put to work fixing the budgets of Victoria and WA, which is on track to post its eighth consecutive budget surplus, than their own.
He noted if revenue was divvied up per capita, NSW's windfall would be sizeable with an estimated additional $3.2 billion in the next financial year.
The distribution of GST has historically been decided based on need, which from about 2000 to 2018 meant resource-rich WA received a lower per capita share than poorer states like Tasmania.
But a 2018 deal struck with the then-coalition federal government meant that in the past two financial years, WA could receive no less than 75c to the dollar of what it would get based on a per capita distribution.
WA's floor increased to the equivalent of NSW's relativity in the 2026/27 carve-up, which came in at just under 82c.
Mr Mookhey is outlining his proposal in a detailed submission to the Productivity Commission into the GST deal ahead of a report slated for August.
Federal Treasurer Jim Chalmers said GST payments were increasing for all states and territories.
15°C