The NSW treasurer has described federal financial relations as a mess as he pushes for reform with a new review that will provide a "much-needed state perspective".
Former Telstra chief executive David Thodey will lead the review, which was announced in the state budget on Tuesday, and is expected to hand down a report in early 2020.
Mr Perrottet said commonwealth funding arrangements had become too complex and restrictive and for some states their share of funding could be a disincentive to reform.
"Through fiscal discipline and strong economic management, we have become the engine room of the national economy," he said in a statement.
"But instead of being rewarded for our success, NSW has been penalised at a federal level, with the Commonwealth and other states reaping the benefits.
"We need to find a fresh way forward."
He told parliament NSW contributed the most in GST and income tax "yet has to sit and watch as it's doled out to other states".
"We rely on the Commonwealth for a substantial part of our funding - but have little control over where it is spent," he said.
Mr Perrottet told reporters he'd spoken with federal counterpart Josh Frydenberg about the review, which was not the first but would provide "a much-needed state perspective".
The NSW Business Chamber welcomed the announcement, saying it was something they'd been calling for and it was "good to see the treasurer has taken the lead".
The review panel will be formed in coming months and will consult with the public before it reports.
Australian Associated Press
