An internal Labor bunfight over the annual GST carve-up has escalated as Victoria’s treasurer accuses NSW of being a “welfare recipient” in response to claims the nation’s most populous state has been short-changed.

The Commonwealth Grants Commission on Tuesday announced the recommended 2024/25 GST distribution, with the national take estimated to grow to $89 billion from about $85 billion in 2023/24.

Under the distribution, NSW and Queensland’s share of the GST pool will fall because rising coal royalties have put them in stronger budgetary positions.

Victoria is due to receive nearly $3.7 billion more than in 2023/24, while NSW will receive $310 million less.

The carve-up has led to civil war between Labor states with NSW Premier Chris Minns on Thursday describing Victoria as a “welfare state” that would be receiving “money from the pockets of NSW families”.

But Victorian Treasurer Tim Pallas returned fire on Friday, declaring the NSW Labor leader did not understand the GST system.

“Not a dollar of NSW GST is going to Victoria,” he said in a statement.

“Victoria has subsidised other states, not the other way around.

“We have paid more into the GST pool than we’ve received every year since its inception.”

In reference to Mr Minns’ “welfare state” barb, Mr Pallas suggested NSW had been an infrastructure “welfare recipient” from the Commonwealth at Victoria’s expense for decades and pointed to his state’s job figures.

“Isn’t it just so Sydney of Premier Minns to bemoan Melbourne’s success,” he said.

But the NSW premier doubled down with his criticism, saying the entire GST system needed fixing after repeatedly questioning whether the unfavourable carve-up was “planned or accidental”.

“The only thing worse than Victoria taking our money is them crying about it afterwards,” he told reporters on Friday.

Mr Minns has called for GST to be split on a per-capita basis with additional funds distributed via grants to states and territories that needed further support.

Such a system would benefit the larger states, which receive less in GST per resident than they raise, but would lead to South Australia, Tasmania, the ACT and Northern Territory receiving less money.

“When the states sit down to eat, NSW can’t eat last every single time,” Mr Minns said.

“This is public money, it’s not government money, it’s owned by the people of Australia and it should be distributed in a fair way.”

The comments could make for an awkward virtual meeting between state and federal treasurers on Friday.

Mr Minns said he did not anticipate the meeting would be friendly but state Treasurer Daniel Mookhey had no choice but to put the best case forward as key negotiations continued over education, health and infrastructure funding deals.

“(NSW is) expected to dip into our pockets for a whole bunch of reforms and initiatives driven by the Commonwealth government, but we can’t do that unless we get our fair share of GST revenue,” he said.

Federal Labor frontbencher Jason Clare wasn’t fazed by the friendly fire, saying the same “argy-bargy” took place every year when the Commonwealth Grants Commission handed down its decision, which was based on an independent assessment process.

“I’m old enough to remember Bob Carr making the same argument to John Howard,” he told Seven’s Sunrise program.

Deputy opposition leader Sussan Ley labelled the GST fight “blokey” and urged state leaders to have constructive talks.

“This is all sounding a bit shouty and loud and I would suggest to the Labor leaders that maybe they dial down the testosterone,” she said.

This post was originally published on Michael West.