## New South Wales Faces Budget Shortfall Due to GST Carve-up
New South Wales is facing a significant budget shortfall, worse than the impact of the COVID-19 pandemic, due to an $11.9 billion shortfall in GST revenue. This was revealed by state treasurer Daniel Mookhey in a speech on Monday.
The shortfall is attributed to a recent decision by the Commonwealth Grants Commission, which Mookhey has labelled "absurd." This decision will result in a significant loss of revenue for New South Wales, exceeding the financial impact of the COVID-19 pandemic.
The state's budget was already under strain due to increased public sector wages, and the GST shortfall further complicates the situation. Mookhey has warned voters to expect tough decisions in the upcoming June budget, prioritizing essential services over "nice-to-have" policies.
While the treasurer aims to reduce the state's debt, he acknowledges the possibility of losing the AAA credit rating due to the financial challenges. He prioritizes protecting family budgets and maintaining flexibility to respond to potential economic downturns over maintaining the credit rating.
The federal government has defended the GST allocation process, emphasizing the independence of the Commonwealth Grants Commission. However, the state government continues to negotiate with Canberra for additional funding for hospitals and schools.
Mookhey advocates for changes to the GST formula, proposing a per-capita allocation system. His concerns have been met with criticism from Western Australia's Premier, who accused him of "whinging."
Mookhey emphasizes that New South Wales contributes significantly to supporting smaller states, providing more financial assistance than Victoria. The state budget is expected to be presented in June.