Rural and regional NSW councils could feel the impact of changes to the way Goods and Services Tax (GST) revenue is distributed across Australia, with the Country Mayors Association of NSW (CMA) talking directly with Treasury officials as part of a national review.

Board members of the CMA have joined senior NSW Treasury officials to discuss the Federal Productivity Commission’s Review of the GST Distribution Reforms, with CMA Chairman Mayor Rick Firman OAM of Temora Shire describing the recent online meeting as “constructively positive”.

The discussion followed a separate sit-down between Mayor Firman and CMA Board Member Mayor Sue Moore of Singleton Council with NSW Premier Chris Minns and NSW Treasurer Daniel Mookhey to examine the review process and its potential implications for the State.

The Productivity Commission review is examining how GST revenue collected by the Commonwealth is distributed among the states and territories.

The distribution process, overseen by the Commonwealth Grants Commission, is designed to ensure each state has the financial capacity to provide comparable levels of public services, regardless of differences in geography, population or revenue-raising ability.

Changes introduced to the GST distribution system in 2018 altered the way relativities are calculated, with the aim of creating a fairer and more stable framework over time.

The current review is assessing how those reforms have operated and whether further adjustments are required.

Mayor Firman said the CMA recognises the far-reaching consequences of how GST revenue is allocated.

“There is no question that the quantum of funding that NSW receives impacts on the funding available to deliver services and facilities into the remote, rural and regional communities our Members represent,” he said.

“The Treasury officials gave us a concise background of the current system and how the 2018 reforms to the GST distribution have impacted on NSW.

"The CMA believes that it is imperative that NSW, as Australia’s most populous state, receives its fair share of GST revenue.”

While GST revenue is paid to state governments rather than councils directly, the level of funding NSW receives ultimately influences the State Budget and the resources available to support infrastructure, services and programs across regional communities.

Premier Chris Minns met with representatives of the Country Mayors Association to discuss equity for the regions in regard to GST.

Rural, remote and regional councils across NSW manage extensive road networks, community facilities and essential services, often across vast geographic areas with comparatively small numbers of ratepayers.

At the same time, many councils are grappling with rising construction costs, insurance premiums, workforce shortages and long-term infrastructure renewal backlogs.

Mayor Firman said financial sustainability remains a significant issue for many regional councils.

“Rural, remote and regional councils have numerous financial sustainability challenges. It is reasonable to assume that a better deal on GST distribution could result in increased financial support for councils and in turn our communities to relieve those pressures,” he said.

“Our CMA slogan is ‘what we want is nothing more than equity’ and while that relates to our rural, remote and regional members, it is perfectly apt for the NSW Government’s and CMA’s efforts to get a fair GST deal for our State.”

Both the CMA and the NSW Government are preparing formal submissions to the Productivity Commission as part of the review process.

Mayor Firman said ensuring regional voices were heard was critical, given funding decisions made at the federal level ultimately shape the services and infrastructure available on the ground in country communities.

The review of the GST Distribution Reforms is ongoing.