You're right. But the amount of taxation generated from people living in say Woodridge is probably not commensurate to what they spend on Social Security, Health and so on, either. The argument doesn't stack up. Shit happens, sadly.
Yes, GST is paid back to the States. But it replaces the old grants system, so again, it really doesn't work, it's just too complicated to bear simple arguments.
Cheers,
Tim