Albanese government delivers $12.7billion blow to Australia's most populous state

Daily Mail​

5 hours ago

The Premier of Australia's most populous state is angry at Anthony Albanese for reducing funds from the GST as high immigration fuels a housing affordability crisis.
Chris Minns and his Treasurer, Daniel Mookhey, on Tuesday delivered their third Budget since Labor came to power in NSW in 2023.
The state is home to a third of Australia's population and receives close to a third of new overseas migrants, mainly in overcrowded Sydney where housing is particularly unaffordable.
But it only receives a little more than a quarter of the revenue from the Goods and Services Tax, which the federal government collects and distributes to the states and territories.
A $3.427billion deficit is forecast for 2025-26 in NSW, with no surplus forecast for another two financial years, as gross government debt soars by another 7.7 per cent to $178.8billion.
With its finances still in the red, the NSW Treasury Budget papers noted Australia's most populated state was missing out on $12.7billion over four years as funds raised from the GST cross-subsidised poorer states - including Victoria.
'While the GST share for New South Wales has fluctuated over time, New South Wales has always been a donor state,' it said.
'Over the past few years, New South Wales has faced declines in relativity, significantly tightening the state's fiscal capacity.
'Since the introduction of the GST in 2000, New South Wales has never received as much as its population share of the GST pool.
'If GST was distributed on a per capita basis, from 2025-26 onwards New South Wales would receive an additional $12.7billion over the four years to 2028-29.'
NSW is home to 31 per cent of Australia's population but only receives 27.1 per cent of funding from the GST, with 28,118 residents last year leaving the state for another part of the country.
The state last year housed 106,730 new overseas migrants, or 31 per cent of the 340,800 permanent and long-term arrivals into Australia.
Yet NSW only gets 86.7 cents for every GST dollar collected, a drop from 92.4 cents in 2023-24 as part of a Commonwealth Grants Commission change.
During that same period, Victoria's allocation has climbed to 96.5 cents for every dollar, up from 85.2 cents, after the state imposed the world's longest lockdowns in Melbourne.
While both states are run by Labor, their finances are very different.
Net debt in NSW - total debt minus its ability to raise cash - was projected to reach $120.3billion by June 2026, making up 13.7 per cent of gross state product.
By comparison Victoria - home to 1.5million fewer people than NSW - was forecast to have a net debt of $167.6billion in 2025-26 - or 25.1 per cent of the economy.
Put another way, Victoria's debt levels as a proportion of the state economy are almost double those of NSW.
High immigration is putting pressure on Sydney and Melbourne in particular, including on water and transport infrastructure.
The NSW government is spending $127.6billion on services in 2025-26 with much of that directed to coping with population growth with a plan to 'improve access to quality housing and reduce pressure on housing affordability'.
NSW is set to receive $27.9billion from Commonwealth GST payments in 2025-26, which would make up 22.4 per cent of total state revenue of $124.2billion.
Treasurer Jim Chalmers last week said he would consider expanding or raising the 10 per cent GST, so more funds could be distributed to the states, when he convenes a productivity roundtable in August.
'What I'm going to try and do - because I know the states will have a view on it, I'm going to try not to dismiss every idea that I know that people will bring to the roundtable,' he told the National Press Club in Canberra.
'I suspect the states will have a view about the GST - it's not a view that I've been attracted to historically but I'm going to try not to get in the process of shooting ideas between now and the roundtable.'
Any change would mark the first reform since the GST debuted in July 2000.
Items like fresh fruit and vegetables, bread and unflavoured milk were exempted from the consumption tax under a deal reached between the Coalition government and the Australian Democrats in the Senate.