WA leaders team up to defend current GST distribution arrangements

"My government wants to diversify Western Australia's economy so it remains the strongest in the nation, which is why keeping our fair share of the GST is so important,” Cook said.

"Our government fought hard for the GST deal in 2018. It has been critical to helping our government invest in and meet our priorities of ensuring every Western Australian has a quality job, a home, and access to the healthcare they need, when they need it.”

The Cook government estimated that if the deal were to be reversed, it would take approximately $6 billion a year from the WA economy.

The Chamber of Commerce and Industry WA (CCIWA) noted that the current GST settings have enabled the state to invest in its major industries, which in turn have contributed to the national economy.

“The additional GST revenue flowing back into WA under the 2018 deal allows our state to invest in the economic infrastructure that supports our national economy,” CCIWA’s chief economist, Aaron Morey, said.

“This economic infrastructure includes the roads and rail networks that get WA resources to market, the crucial energy and water infrastructure that allows our industries to operate, and the housing, hospitals and schools that support the tens of thousands of workers who drive our industries.”

In 2018, parliament legislated changes to the GST revenue distribution process to ensure that each state retained at least 75 cents for every dollar of GST revenue it raised. This followed concerns from the WA government that it wasn’t getting a fair GST deal.

Before the reforms, WA’s mining royalty revenues, which peaked at $11.4 billion in 2020–21, resulted in the state being assessed as requiring a much smaller share of GST revenue. This saw its GST relativity fall to a low of 0.3 in 2015–16, meaning it kept only 30 cents per dollar of GST it raised.

The updated distribution process stipulated that the Commonwealth government would “top up” the GST pool to ensure that no state or territory would be worse off than it would have been before the deal.

In its issues paper, the Productivity Commission estimated that the 2018 deal would cost the Commonwealth $26.3 billion over the four years from 2025–26 to 2028–29 in equalisation payments, making up revenue shortfalls in states other than WA.

With its review, the Commission has set out to investigate whether the current GST distribution arrangements enabled states to have similar capacities to provide public services, minimise GST revenue volatility and support fiscal sustainability for Commonwealth, state and territory governments.

Following the roundtable, WA Deputy Premier and Treasurer Rita Saffioti said that the current settings allowed the state to invest in its major industries.

"It is vital that WA fights to ensure that the legislated 2018 reforms to the GST system remain in place, so we can continue invest and grow the industries that support our nation's prosperity and create valuable jobs,” she said.

"Maintaining Western Australia's fair share of the GST is in the national interest, with the income generated in WA flowing across the nation to fund essential services and infrastructure in other states and territories.”