The states have ramped up demands for extra financial support and pushed back against the federal government’s recent decision to axe up to 50 infrastructure projects and move to a 50-50 funding model for road and rail construction.
A key issue is a special deal struck by then-treasurer Scott Morrison that delivered Western Australia a minimum of 70 cents of every dollar of GST raised within the state from 2022-23,before increasing to 75 cents in 2024-25.
It included a guarantee to every state and territory they would not be financially worse off until at least 2027. The original plan was forecast to cost federal taxpayers $2.3 billion over three years.
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Instead,it is now expected to cost $33.9 billion. States such as Victoria and NSW face big falls in their GST revenue once the program is fully in place in mid-2027.
State and territory treasurers,after the Friday meeting,said Chalmers should use his mid-year budget update – to be released in a fortnight’s time – to promise no jurisdiction would be financially worse off under the GST deal,in a move that would cost at least $5 billion a year.
They said without the change this month,the states may have to contemplate extra taxes.