It's not often I find myself agreeing with Tasmania's Liberal Treasurer Eric Abetz, but debate on GST distribution places us on the side of an important principle.
Our Federation is grounded on the promise that every Australian should be able to access public services of a comparable standard regardless of where they live. How this has been put into effect when it comes to GST is horizontal fiscal equalisation (HFE).
For decades, Australia's HFE architecture was arguably globally leading but, in 2018, former prime minister Scott Morrison's so-called GST reforms undermined this system.
Now the public debate risks further eroding it.
The debate on changes to the GST has been cast as a fight between Western Australia and the east coast states and territories to retain special treatment for mining royalties.
NSW and Queensland have advanced an argument that the GST should be allocated on a per capita basis, as that would significantly benefit these states with large populations.
These loud voices in the debate have lost sight of the bigger picture: that Australians should not be disadvantaged in their access to essential public services simply because of where they live.
This principle is not just a complex bureaucratic or accounting formula (although it is); it is the practical expression of fairness, equality of opportunity, and national cohesion. Ultimately, it is one of the defining characteristics of Australia.
To understand the true value of the principle of equalisation, we only need to look at the United States. The American federation operates under a fundamentally different model, one where the quality of a child's education, the standard of healthcare a family receives, and the basic safety nets available to citizens can vary wildly depending on the state in which they reside.
This model accepts that deeply unequal standards of living, varying levels of poverty, and drastically different infrastructure are inevitable byproducts of a federated system that does not prioritise equalisation.
We must ask ourselves: is this the kind of Australia we want? Do we want a nation increasingly divided by wealth and geography?
The debate surrounding GST often gets bogged down in state-based rivalries, but defending equalisation should never be framed as an attack on any single jurisdiction.
Every state and territory should absolutely be free to benefit from their natural resources, natural endowments, industry structures, economic strengths, and specific policy choices. Celebrating the success, innovation, and prosperity of our strongest states is essential for a growing national economy.
However, this regional success must not come at the expense of all other governments and the broader citizens of Australia. Nor does one state's extraordinary economic dominance justify permanent and preferential treatment within our national revenue distribution system. The same rules should apply to every state and territory to ensure that the Federation is maintained equally for all Australians.
The 2018 changes are being temporarily patched over by a "No Worse Off Guarantee" provided by the Commonwealth. Without this material guarantee continuing, some jurisdictions will have to offer a lower level of public services, or as a worse case, increase inefficient taxes that the GST was designed to do away with.
In defending HFE, we are defending the core egalitarian values that make Australia unique. We do not want a nation where a state's lack of natural resources or a smaller population scale translates to underfunded schools and strained hospitals.
We must restore full HFE to maintain confidence in our federal financial relations, ensuring the arrangements remain fair, transparent, and fit for purpose. By championing horizontal fiscal equalisation, we are explicitly choosing an Australia that values solidarity over disparity.
It is why the Productivity Commission, and its rigorous evidence-based analysis, has also come to the same conclusion: the system needs to change.
The ACT government supports a return to the pre-2018 allocation of GST, because it delivers fairness in Australia.
