6 December 2023

Extension of ‘No Worse Off’ deal to help fund essential services

National Cabinet has today endorsed a comprehensive Commonwealth‑state agreement across health, the NDIS and GST arrangements that will ensure a fairer, more sustainable distribution of funds for health, disabilities and other essential services.

As part of the broader health and NDIS deal brokered by the Prime Minister with First Ministers at National Cabinet today, we have agreed to extend the No Worse Off Guarantee by three years to provide the states and territories with certainty in their coming budgets.

This is a very positive outcome which recognises the pressure on all of our budgets.

It reflects our instinct and our inclination is to work with states and territories as constructively as we can where that’s possible, where that’s affordable and where that’s responsible.

We get the best outcomes for the people we jointly represent when we work together and that’s what we’ve done.

In the past week we’ve come together, recognising the pressure on all our budgets, and we’ve come to an agreement that works for everyone.

Other aspects of the GST deal legislated in 2018 will remain in place, including reforms that provide Western Australia with a fair share of GST revenues – as we’ve confirmed previously and repeatedly.

That process includes a Productivity Commission inquiry to be completed by the end of 2026 into whether GST arrangements are operating efficiently, effectively, and as intended.

The GST distribution system is transitioning to a new equalisation arrangement, which began in 2021‑22 and will conclude in 2026‑27.

During this six‑year transition, a legislated Commonwealth‑funded no worse off guarantee will ensure no state receives a lower cumulative amount of GST than it would have under the previous arrangements.

Today’s agreement extends the guarantee to the end of 2029‑30.

In this challenging economic environment, it’s more important than ever for all levels of government to come together around some of the big economic and budgetary pressures that all of us are facing.

We’ll continue to work with our state and territory colleagues in the best interests of all Australians.

I pay tribute to the Prime Minister for the progress made today and I thank the First Ministers and Treasurers for engaging in good faith in recent days and weeks.