'We're under pressure too', Chalmers tells treasurers

The GST "no worse off guarantee" was discussed at the treasurers' meeting in Brisbane on Friday, with states hoping to make the temporary top-up to GST payments - which is due to expire in 2027 - a permanent fixture.

The "no worse off guarantee" was set up in 2018 after a deal was struck under the former coalition government with Western Australia.

A statement issued after the meeting showed a partial or temporary extension was discussed, but all state and territory treasurers want it made permanent in the upcoming mid-year federal budget update.

Treasurer Jim Chalmers said the discussion was productive and would continue at national cabinet next week.

"The cost to the Commonwealth of the GST no-worse off guarantee has substantially increased since the original deal was put in place, and any extension would have significant fiscal implications for the Commonwealth," he said after the meeting on Friday.

"Any developments on GST need to recognise the pressure on all our budgets, not just on state budgets."

State and territory treasurers said they would prefer the GST issue was squared away before considering any proposals for a more sustainable funding model for the National Disability Insurance Scheme, a matter that was also discussed in the Friday meeting.

Queensland Premier Annastacia Palaszczuk said she did not want to see any decline in the GST revenue her state received.

"What's at stake from 2026 onwards is up to a billion dollars a year to the Queensland government ... at national cabinet I'll be fighting for our fair share of GST," she said on Friday.

The meeting also considered a revitalised national competition policy agenda, and agreed to set up a working group to better understand the revenue implications of the High Court's ruling on Victoria's electric vehicle excise tax.

The mid-year budget update, due later this month, is expected to show a substantial improvement to the bottom line, according to Dr Chalmers, but not a forecast for a second surplus.

Yet others expect a second year in the black for 2023/24, including Rich Insight economist Chris Richardson.

He is forecasting a $10 billion surplus as it continues "raining dollars".

He also anticipates deficits that are each more than $20 billion smaller than Treasury's May forecasts, starting at $11 billion in 2024/25, $13 billion in 2025-26, and $7 billion in 2026/27.

In 2022/23, the first surplus in 15 years was posted, and at $22 billion, it was $18 billion bigger than expected.

Mr Richardson said the make-up of the surplus was evolving, with personal and spending taxes providing a larger contribution than profit taxes now that commodity prices have stalled.

Australian Associated Press