GST carve-up leaves Qld, WA short-changed

It also noted that Victoria was previously receiving higher GST distributions because of the cost to it of Covid-19. But Victoria actually takes more from land taxes than Queensland. Land tax rates are more than twice as high, and transfer duties per real estate transaction are 53 per cent higher. Looks like high taxes might have crippled Victoria's property market giving its government less income. Not our fault.

The population justification is also hard to fathom. Both states are essentially growing at the same rate, yet the commission's transport assessment adds about $522m to Victoria's GST needs while subtracting about $707m from Queensland's.

How could that be when Queensland is eight times the size of Victoria and the population significantly less concentrated? Wouldn't transport costs be higher here?

Perhaps the most telling example is Covid-19. Victoria previously received extra GST because its Covid-19 expenses were above average. Those expenses have only now dropped out of the calculation.

In other words, one state's costly policy mistakes can become everybody else's fiscal problem.

In fact, the statistics suggest that Victoria has been chronically mismanaged for decades. In 1990 Victoria produced 26.9 per cent of Australia's output with 25.6 per cent of its population, while Queensland produced just 15.2 per cent with 17.1 per cent of the population.

Today Victoria has 25.6 per cent of the population but produces only 22.7 per cent of output, while Queensland has 20.5 per cent of the population and produces 19.3 per cent.

Australia was designed as a federation, as some of the most successful economies in the world, like the USA, Canada, Switzerland and Germany, were. Competition between states drives innovation, productivity and income growth. What the GST system is doing is penalising the most successful and rewarding the failures.

A Labor minister describes competition between the states as a race to the bottom when in fact it is a race to the top. Queensland needs to break the paradigm and team up with WA. Queensland's finances are in a hole, but so are the country's. We won't fix either by repeatedly doing the same old failed things.