THE Baillieu government will receive a windfall of more than $800 million over the next four years after the Commonwealth Grants Commission decided to return almost half the money it took from Victoria last year.
The commission, which distributes GST revenues between the states, lifted Victoria's share of the revenues from 22.5 to 23 per cent, in a redistribution of Western Australia's mining royalties to other states.
It will give Victoria an extra $192 million in 2012-13, with the amount rising in future years. But Victorians will still subsidise smaller states and territories by almost $1 billion a year.
That pales, however, beside the subsidy to other states from WA. The West next year will subsidise other states by $2.4 billion, or more than $1000 per head, with the WA government getting back just 55? for every dollar of GST paid.
The money will go mostly to the Northern Territory, which gets $5.52 for each $1 paid, Tasmania ($1.58) and South Australia ($1.28).
Victorian Treasurer Kim Wells hit out at the commission, saying Victoria would receive no more than it had assumed in its mid-year estimates published in December - when the government announced it would cut 3500 jobs to ensure the budget stays in surplus.
''There is no financial benefit to Victoria in the figures released today'', he said. ''Under this flawed and inequitable formula, Victorians will subsidise the rest of Australia to the tune of $171 per person in the 2012-13 year.''
''For every dollar of GST paid by Victorians, we get only 92? back.''
On the assumptions used in the mid-year outlook, however, the commission's determination will give Victoria about $200 million more over the next four years than the government had assumed in December, and more than $800 million more than its estimate in last year's budget.
In a budget spending $50 billion a year, that improvement is relatively minor. It could allow the government to soften its planned 3500 job cuts, however, if it chooses to do so.
But in a potentially embarrassing revelation, the commission figures show Victoria's gains would have been $80 million higher had it not been for the low wage rises for Victorian public sector workers.
The commission revealed in 2012-13 it will distribute $592 million a year away from Victoria because it pays teachers, nurses and public servants less than their counterparts in other states.
When services are cheaper to provide in one state, the commission concludes that the state needs less money.
Victoria's low wages end up benefiting NSW, WA and the two territories.
The commission's report reveals that in all, it cut $4.3 billion from Victoria's annual GST grants, mainly because, relative to other states, it has few Aborigines - assumed to be costly to service - a population that is young, large and concentrated in cities, low public-sector wages, strong housing sales, and many privatised services.
But that was offset by $3.3 billion added to Victoria's share, mainly to compensate for the state's lack of mining royalties, but also to offset the poor deal it gets from the Commonwealth in specific-purpose payments, and the costs of rapid population growth.
