By Sean Nicholls and Matt Wade
Treasurer Dominic Perrottet has ramped up pressure on the federal government over GST reform, declaring NSW is $15 billion worse off due to a distribution formula that rewards "lazy states", such as Queensland.
In an interview before his first budget on Tuesday, Mr Perrottet welcomed the federal government's move to review the GST system, but said it "should be doing a lot more".
"We've become the safety net for the lazy states," Mr Perrottet said.
"You look at Queensland. They're embarking on very little reform, if at all, have not done so. And we end up picking up the tab.
NSW Treasurer Dominic Perrottet has taken aim at "lazy states", such as Queensland, over GST. Credit: Janie Barrett
"Why should NSW taxpayers have to foot the bill for governments around the country who aren't bold enough to embark on reform?"
The NSW government argues it has been a "victim of its own success" with the GST.
The state's half-yearly budget review, released in December, said that in 2019-20 households in NSW will pay $23.7 billion in GST but the state will receive just $17.8 billion in return.
"This is by far the most any state has given to the other states in the history of the GST," the review said.
It wants the federal government to move to a per capita system of GST funding instead of the present model which seeks to ensure all states have a similar capacity to deliver social services.
Under the formula, states experiencing strong economic conditions normally get a smaller share of the national GST pool because their own tax revenues rise.
Mr Perrottet released modelling which shows that under a per capita system NSW would receive an extra $14.7 billion in GST over the four years to 2020-21.
The Treasurer said that under the present system NSW's share of GST funding is set to fall to 25.5 per cent by 2020-21, or by $13.1 billion.
This percentage is worse than that outlined in last year's state budget, which revealed NSW's share was expected to fall to 25.9 per cent – or by $10.8 billion – by 2019-20.
Mr Perrottet linked this to the revenue that has flowed from the government's decision to privatise state-owned electricity assets, a policy it took to the 2015 state election.
"The people of NSW shouldn't be penalised because they've backed in tough reform to get our state moving," he said.
Earlier this year the federal government announced a Productivity Commission inquiry into the GST distribution system. It will report in January 2018.
Mr Perrottet said the theme of his first budget would be "making sure that we have the best services available today, but we are positioning our state for future generations and decades to come".
He said there would be a strong emphasis on social infrastructure such as schools and hospitals.