PM backs GST deal, leaves future taxpayers on the hook for billions

Anthony Albanese has promised to keep a special deal to protect Western Australia’s share of the GST for as long as he is prime minister, reminding every other state that it was his government bankrolling an agreement that was on track to cost taxpayers $60 billion.Speaking in Perth, Albanese effectively made redundant a report into the deal by the Productivity Commission, which earlier this month declared the GST allocation system a “mistake” that will weigh on the federal budget into the next decade.Prime Minister Anthony Albanese has effectively killed speculation of a change to the GST deal that bankrolls the West Australian budget of Premier Roger Cook.Alex Ellinghausen“There will be no change to WA’s GST arrangements whilst I’m prime minister. That is my view. That has consistently been my view,” he told a press conference. “There will be no change.”The deal, put in place by then-treasurer Scott Morrison after the collapse in WA’s share of GST, was expected to cost around $2.3 billion. Instead, it had blown out to $23 billion by 2024 and is on track to cost $60 billion by the end of the decade.The extra spending goes to every other state and territory to ensure they are not left worse off by the deal.In a scathing interim report, the Productivity Commission found the agreement created perverse outcomes, almost all of which benefit Western Australia at the expense of the rest of the federation and federal taxpayers.A bushfire in NSW would actually deliver extra GST to Western Australia because of the way the deal is structured.The commission also warned that the cost of protecting other states and territories, currently about $6 billion a year, could double if the price of iron ore climbed.A final report is due by year’s end, but Albanese’s declaration made redundant whatever the commission ultimately recommends. He said there should be no surprise that the institution would deliver an “economic rationalist” worldview on the deal.He pushed back at criticism from every other state and territory about the deal, noting that ultimately it was being paid by the federal government.Prime Minister Anthony Albanese in Perth yesterday.Matt Jelonek“[The] important thing that sometimes isn’t understood from some of the critique of WA getting its fair share of the GST is that those additional payments have not come from states and territories; they’ve come from the Commonwealth,” Albanese said.“I’m comfortable with that, and what I say to premiers and chief ministers, though, is that you need to bear that in mind when you are discussing federal-state financial relations.”NSW Treasurer Daniel Mookhey, who described the Productivity Commission’s report as “superb”, said he would continue to fight for a change to WA GST arrangement.He acknowledged that the prime minister had pledged to stick with the deal, but the evidence for change was overwhelming.NSW Treasurer Daniel Mookhey has found to continue the fight to change the WA GST deal.James Brickwood“Right now, eight out of nine states and territories, Labor, Liberal, all say the current system rewards some Australians more than others, and I think that ultimately we’re going to have to continue to make our case,” he told News24.“This struggle for a fairer system will go on.“What the Productivity Commission found was that this system is costing the Commonwealth a lot more. That it even found that in a scenario in which NSW faces a disaster, West Australia automatically gets a funding increase.”Queensland Treasurer David Janetzki said while WA’s resources sector was being recognised, his state’s contribution to the national economy was being penalised under the GST deal.“Jim Chalmers and Anthony Albanese must show that they back Queensland and that they get Queensland,” he said.“They must listen to the advice of the federal Productivity Commission and stop over-penalising other states that develop resources in the national interest.”Victorian Treasurer Colin Brooks said that since the GST carve-up was introduced, his state had received $31 billion less than if it was allocated on a per capita basis.“The Productivity Commission’s interim findings just this month back up exactly what Victoria has been saying for years, and we’re glad to see it recognised,” he said.“The current system isn’t working. It leaves other states like Victoria exposed and goes against the core purpose of fair distribution.”Premier Roger Cook said all West Australians were relieved and pleased to hear Albanese’s commitment on the agreement, while suggesting other states were envious of WA’s economy.“There is a lot of noise coming from the east coast, and we understand that on the east coast people look to Western Australia, they see that our economy is going forward, that jobs are being created and opportunities for people who live in this state abound,” he said.Nationals leader Matt Canavan said the prime minister’s words could not be trusted, arguing he needed to make a more permanent commitment to the GST deal.“We need a tattoo on the PM saying he will not change the WA GST deal,” he said.Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.Shane Wright is a senior economics correspondent for The Sydney Morning Herald and The Age.Connect via X or email.From our partners