National

GST deal passes pub test: Turnbull

By AAP Newswire

Malcolm Turnbull says the proposed new system for carving up the GST passes the "pub test" but he can understand the states wanting to do their sums before committing to it.

Treasurer Scott Morrison will put to his state and territory counterparts in September a new deal that would iron out some of the wrinkles in the GST revenue distribution system, requiring a $7 billion cash injection to do so.

The state and territory governments have taken a cautious approach to the offer and federal Labor has questioned where the extra money will come from.

"Every premier and chief minister is entitled to go through the numbers carefully," the prime minister told reporters in Brisbane on Friday.

However, he said the new GST distribution floor of 75 cents in dollar per person "passes the pub test".

Labor frontbencher Anthony Albanese questioned the government's sums.

"You can't keep spending the same dollars," Mr Albanese told the ABC.

"The government needs to say where the $7 billion is coming from."

Cabinet minister Peter Dutton said the funding injection would come from getting 700,000 people off welfare and into work, while growing tax revenue.

"No state worse off, no doubt," Mr Dutton said.

"Everyone gets a bit of extra cash."

States and territories would no longer need to head to Canberra "with a begging bowl" to lobby for their fair share, the prime minister said in an earlier Facebook post.

"We'll make sure no state or territory will ever again suffer Western Australia's fate of the last few years," he said.

Western Australia has long complained about its share dropping during the mining boom due to the way the existing system, known as horizontal fiscal equalisation, is benchmarked.

That benchmark will shift over eight years to a new standard that will ensure the fiscal capacity of all states and territories is at least the equal of NSW or Victoria (whichever is higher), evening out the impact of extreme events such as the WA mining boom.

There will also be a boost to the pool of funds available as the new standard is set, which over the eight years from mid-2021 will total $7.2 billion.

Attorney-General and West Australian MP Christian Porter said the changes were about the "art of the achievable".

"The critics will come up with three different tweaks they would have preferred," he told 6PR radio.

"But seriously, they have not been inside the tent for eight years trying to find an enduring solution that will stick with all the other states."