'Novel' claim to have GST money cover Qld debt to NSW

Calculations to carve up $95 billion in GST revenue between states should take into consideration Queenslanders' unpaid hotel bills, the NSW treasurer says.

Daniel Mookhey laid out his latest plan on Friday to reconcile a hotel quarantine debt he says is owed by the Sunshine State as a result of COVID-19 hotel quarantine stays in Sydney.

"If even Victoria can pay its bills, so can Queensland," he told a budget estimates hearing.

Posturing and demanding letters have failed to budge Queensland, which says it never agreed to pay the cost of its residents' hotel stays in NSW.

But Mr Mookhey said he had asked the Commonwealth Grants Commission to consider the unpaid $105 million debt when assessing future GST revenue distribution to the states.

About $95 billion is expected to flow in the 2026 fiscal year - making up a substantial portion of state and territory revenue.

"I am honest about the fact that that is a relatively novel claim to put to the (commission)," Mr Mookhey said.

"I'm not going to say that's going to work but that is the first strategy we're applying."

The backup was withholding payments to Queensland for other matters that do not create any risk to life or liberty, he said.

NSW Treasury has reasoned quarantine was not state policy driven as the response was aligned with national principles for responding to COVID-19.

"Higher per capita costs in NSW were a result of Sydney's status as the primary gateway for overseas repatriations for all Australians," it has told the federal commission.

The treasury had promised to provide data on interstate residents quarantined in NSW, amounts invoiced to states for those residents and which invoices remained outstanding.

The federal commission's report is due to be completed in early 2025.