Pic: iStock
Pic: iStock

‘Unacceptable’: Blow-up over the GST

SCOTT Morrison and Josh Frydenberg are facing a revolt over their proposal to change the way GST revenue is carved up.

At a pivotal meeting in Melbourne today, the treasurers from every state and territory unanimously demanded the government legislate a guarantee that none of them will be worse off after the introduction of a floor in GST payments.

Under the proposal, no state would receive less than 75 per cent of its own GST revenue, starting in the 2024-25 financial year.

The plan was hatched to protect Western Australia from the prospect of its GST share crashing back to the mining boom lows of less than 30 cents in the dollar.

But despite assurances from Mr Frydenberg, several states suspect they will end up with less money - and today the government refused to enshrine a guarantee in the legislation.

"It's pretty hard to unite the states and territories when it comes to GST distribution, but Scott Morrison and Josh Frydenberg have managed it," Shadow Treasurer Chris Bowen said.

"The states united against their arrogant proposal not to assure states and territories that they won't be worse off in the legislation.

"Scott Morrison and Josh Frydenberg have said that no state would be worse off, but they are not prepared to make that guarantee in writing, in the law.

"Now we have just heard the Treasurer of New South Wales, the Liberal Treasurer of New South Wales and the Liberal Treasurer of Tasmania unite with the Labor Treasurers of Victoria and Queensland to say that this is unacceptable, that they are angry about this, that they want this reflected in the law.

"Every single state and territory treasurer - Labor/Liberal, small state/big state, GST net recipient or GST net contributor - they all agreed."

Ahead of the meeting, Victorian Treasurer Tim Pallas said he believed the government was trying to fix a "political problem" in Western Australia and their plan had "nothing to do with making the distribution of the GST fairer".

Modelling provided by Mr Pallas's department has suggested falling iron ore prices in Western Australia and a housing downturn in Victoria and NSW could combine to leave multiple states hundreds of millions of dollars in the red.

But Mr Morrison hit back during a press conference this afternoon.

"Premiers and treasurers always want more," the Prime Minister said.

"Our government is not in the habit of writing blank cheques to anybody. It is my job to ensure that every single state and territory is better off under the plan."

Mr Morrison said he didn't need the states' approval to pass legislation, and signalled he would do so when parliament resumes later this month.

Mr Bowen indicated Labor would support the floor policy, but would first try to pass an amendment guaranteeing no state would be worse off.