In a few days, the Government of New South Wales (NSW), a state on Australia's east coast, and the Parliament of Tasmania, an island state, addressed fairness issues in Australia's GST system. Both the NSW government and the Tasmanian Parliament stated that the current GST distribution system is no longer sufficiently fair or equitable, criticizing the 2018 changes.

Main Points from Statements

In its statement, the NSW government argues the system no longer produces a fair outcome. The main issue is the 2018 changes to GST distribution, which were designed to make the system more sustainable and predictable. According to NSW, the Productivity Commission has found that these reforms have instead made the system less equitable, less consistent, and more complicated.

The NSW government added that the 2018 changes are expected to cost the Australian Government AUD 28.8 billion by 2025-26. At the same time, NSW receives less GST revenue than would correspond to its share of Australia's population, despite having significant responsibility for infrastructure and public services in Australia's largest state economy and most populous state.

The Tasmania Parliament went a step further and unanimously called on the federal government to restore the pre-2018 GST distribution system. The concern is that the current and proposed arrangements could give Western Australia a disproportionately favourable share of GST revenue because of its strong mining-related revenue base and particular fiscal circumstances. The Parliament fears that without the previous system and with changes favouring Western Australia, its GST allocation could fall by up to 15% annually, equivalent to a loss of up to AUD 530 million in 2024-25 alone.

Conclusion

The criticism from both NSW and Tasmania underscores growing state-level frustration with the 2018 GST distribution reforms. As calls for structural adjustment build, the federal government faces increasing pressure to re-evaluate the system to ensure fiscal equity across all states and territories.