Victoria's Treasurer has branded NSW Premier Chris Minns a "tool" as a simmering feud over GST distribution threatens to boil over.
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Victoria stands to receive $22.24 billion in GST revenue next financial year under the Commonwealth Grant Commission 2024 update released in March, up from $18.5 billion this year.
It appears to answer the state government's repeated calls for a "fairer" division of funds, but has come at the expense of NSW and Queensland, which saw $310 million and $469 million shaved off their respective shares.
NSW Treasurer Daniel Mookhey said the allocation was "absurd", while Premier Chris Minns called Victoria "a welfare state receiving a whole bunch of money from the pockets of NSW families".
NSW Premier 'is a tool'
The Victorian government initially said it wasn't going to be drawn into a slanging match with the other eastern states, but on March 15 Treasurer Tim Pallas came out swinging.
"Isn't it just so Sydney of Premier Minns to bemoan Melbourne's success," Mr Pallas said.
"Contrary to Premier Minns' view, New South Wales does not provide Victoria with a GST windfall.
"Next year, even with these payments, Victoria is still receiving less than its population share - as it has in every year since the GST was introduced."
Mr Pallas said he didn't think Mr Minns understood how GST distribution worked.
"He may not be the sharpest tool in the shed, but he is a tool."
A government spokesperson said the longer term fairness of the carve-up would depend on the retention of a "no worse off" guarantee introduced in 2018.
The no worse off guarantee provides top up payments to states that would otherwise be short-changed by the redistribution process - Victoria stands to gain an extra $1.5 billion from them next year - but they are due to end in 2027.
"This Commonwealth Grants Commission assessment reflects that the GST distribution system is finally working as intended for now," the spokesperson said.
"We have always supported the system of equalisation, but the no worse off guarantee must be made permanent, or Victoria will be shortchanged by $1-$2 billion each year."
But in the short term the GST distribution and top up payments will put Victoria $3.8 billion up on the current financial year.
It could put the state budget back in surplus in 2024-25.
Will the regions benefit?
ACM asked the government how much of the $3.7 billion windfall would go to the regions, but it declined to say.
But the state's mid-year financial update, also released in March, showed new spending since the 2023 budget flowing to Melbourne at a ratio of 14 to one.
Between July and December 2023 the government committed:
- $602 million to level crossing removals
- $335 million to expanding the Thomas Embling hospital redevelopment
- $753 million for affordable housing in inner Melbourne
- $491 million for sewage treatment plant upgrades in Werribee
- $3.97 billion for the Suburban Rail Loop
- $3.4 billion for M80 Ring Road upgrades
- $4.6 billion for Eastern Freeway upgrades
The only major regional spending was $591 million for new VLocity trains and $423 million for a new convention centre in Geelong.
It puts new spending for Melbourne at more than $14 billion, compared to just over $1 billion for the rest of Victoria.
Meanwhile the state's interest bill has grown by $2 billion over the past year.
Mr Pallas told ACM his focus was keeping the state's economy strong and he wouldn't be drawn into any specific commitments to regional Victoria ahead of the May budget.
"Our economic strategy is all about creating jobs, keeping local communities strong, and encouraging businesses to invest and expand their workforces," Mr Pallas said.
"This year's budget will continue to deliver the promises we made at the last election and protect the jobs and services that Victorian families rely on."