Australia's Federation is unique in that it gives a financial fair go for people in all states. More than in any other country, the federal government chips in to even up state governments so they can all provide roughly the same level of health and education to their citizens.

Compare that to the US. This year teachers in several poor states of the US have gone on strike because their bankrupt state governments cannot pay a living wage and Washington won't help.

The good thing about the changes announced by Treasurer Scott Morrison is that they leave the system largely intact. As it has since at least 1981, an independent body called the Commonwealth Grants Commission will still divide up the revenue from the GST, $63 billion last year, in a manner that evens up the states.

The Treasurer explains his new GST system at a press conference in Canberra. Credit:Alex Ellinghausen

Victoria and NSW have long complained that this redistribution favours poorer states such as South Australia, and the Northern Territory. NSW last year received only about 87 per cent of the $20 billion it would have received if the money had been handed out on a per capita basis. It has 31 per cent of the population but received only 28 per cent of the GST. Victoria received only about 93 per cent of its $16-billion per capita share. On the other hand, SA received 143 per cent and NT more than four times its population-based share.