The Turnbull government has accused states restricting the development of gas reserves of being "wilfully blind" to their own economic interests, as it holds the threat of cutting GST payments over them.
The discussion around changing the way gas resources are treated in the GST carve-up comes as the chemical industry warns jobs are being lost because of high gas prices.
Energy Minister Josh Frydenberg says it's a "curious consequence" of existing GST arrangements that states which do develop their resources are penalised while those which don't are rewarded.
"It's even very unfortunate that this discussion has to be had at the moment because the states are so wilfully blind to their own economic interests," he told Sky News on Monday.
If Victoria were to develop its gas resources, manufacturers and households in that state would benefit greatly, he said.
"You'd see more jobs, more investment and most importantly of all, lower energy prices."
Finance Minister Mathias Cormann has described GST distribution as a lever to encourage states to develop their economies to their full potential.
The Commonwealth Grants Commission - the independent body that carves up the GST pie - has indicated it will consider coal seam gas development as part of its 2020 review of the formula to split the tax take between jurisdictions.
Queensland and South Australia have no bans on gas exploration or development, but all other jurisdictions (bar the ACT which doesn't have any gas reserves) have some form of restrictions.
The commission has indicated it could take the view that all states have the opportunity to exploit gas resources and whether they do or not reflects policy choices - potentially leaving states with a budget hole if they're not raising revenue from gas developments.
The Productivity Commission is also examining the way GST is distributed, including the impact of resource development.
Meanwhile, Chemistry Australia, which represents chemical manufacturers, says gas prices have tripled for its members over the past five years.
"Australians need to know that this crisis is hitting twice: once on their gas and electricity bills, and again in job losses," chief executive Samantha Read said.
Share
