Prime Minister Anthony Albanese has moved to shut down renewed debate over Western Australia’s share of GST revenue, promising there will be no change to the state’s current arrangements while he remains prime minister.
The commitment comes after a Productivity Commission review reignited tensions between Western Australia and other states over the way GST revenue is distributed across the country.
Speaking alongside WA Premier Roger Cook in Perth on Monday, Mr Albanese reaffirmed his support for the existing GST floor, saying Western Australia plays a crucial role in driving the national economy and should continue receiving what he described as its fair share.
Under reforms introduced by the former Coalition government in 2018, Western Australia was guaranteed a minimum GST relativity of 75 per cent, preventing the state’s share from falling below that level.
The federal government has also provided additional funding to ensure other states and territories are not financially disadvantaged by the arrangement.
However, an interim report from the Productivity Commission released this month strongly criticised the reforms.
The review argued that the changes had made Australia’s GST distribution system more complicated and less equitable, while also imposing a significant cost on taxpayers.
According to the Commission, the changes had cost almost $23 billion up to the 2024–25 financial year.
The findings triggered an angry response from the WA government, with Premier Roger Cook strongly defending the current system and rejecting suggestions that Western Australia should receive a smaller share.
Mr Cook said criticism of the arrangements failed to recognise Western Australia’s contribution to the national economy, particularly through mining, resources and exports.
Mr Albanese sought to distance the federal Labor government from the review, stressing that it had originally been commissioned under the former Morrison government.
He said his position on the issue had remained consistent and made clear that the 75 per cent GST floor would remain in place.
The Prime Minister said Western Australia deserved certainty because of the major role the state plays in supporting national economic growth.
Mr Cook welcomed the commitment, saying Western Australians would be reassured by the Prime Minister’s statement.
He described Mr Albanese as a leader who understood Western Australia and said the promise effectively brought the latest debate over the state’s GST arrangements to an end.
According to Mr Cook, the assurance gives Western Australians confidence that the existing distribution model will remain intact despite the concerns raised by the Productivity Commission.
The GST dispute has long been one of the most politically sensitive financial issues between Western Australia and the Commonwealth.
For years, WA governments argued that the previous GST distribution formula unfairly penalised the state during periods of strong mining revenue, at times leaving Western Australia with a dramatically reduced share of every GST dollar collected.
The 2018 reforms were designed to address those concerns by establishing a minimum floor and gradually changing the way GST revenue was distributed.
Critics, however, have continued to question whether the system is sustainable and whether the federal government should keep providing extra funds to protect other states from losses.
Mr Albanese’s renewed commitment comes just days before state and territory leaders are scheduled to meet at National Cabinet.
The upcoming meeting is expected to deal with several major national issues, including the development of consistent artificial intelligence standards and Australia’s response to the H5 bird flu outbreak.
Despite the renewed political controversy, GST arrangements are reportedly not formally listed on the National Cabinet agenda.
For Western Australia, however, the Prime Minister’s latest pledge appears to provide strong political certainty that the current GST framework will remain in place for the foreseeable future.
