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🇦🇺 Australia /Energy & Infrastructure

Albanese's permanent marker GST pledge faces challenge from damning report

From ABC Australia · () English

Translated from English, summarized and contextualized by DistantNews.

At a glance

News From a news agency Context piece
  • A new report from the Productivity Commission criticizes the 2018 GST deal inherited by the Albanese government.
  • The deal significantly benefits Western Australia while costing the Commonwealth nearly $23 billion, far exceeding initial estimates.
  • The commission recommends unwinding the deal's architecture to restore equitable public services across states, sparking a federation dispute.

Prime Minister Anthony Albanese faces a significant challenge in potentially unwinding a Goods and Services Tax (GST) deal he inherited, which has ballooned into a costly burden for the Commonwealth.

no change to WA GST

— Anthony AlbaneseScrawling a pledge on a piece of paper with a permanent marker.

Two years ago, Albanese publicly pledged to maintain Western Australia's GST deal, famously signing a pledge with a permanent marker. However, a recent interim report by the Productivity Commission has delivered a scathing assessment of the 2018 reforms, enthusiastically adopted by Labor. The commission argues the deal has left Western Australia substantially better off at the expense of other states.

The reforms, designed to guarantee states a minimum GST share and compensate those left worse off, have instead resulted in massive "no worse off" payments. These payments have soared to nearly $23 billion, vastly exceeding the initial $5 billion projection for 2024-25. The commission contends that this system has weakened the GST's core purpose: ensuring Australians receive comparable public services regardless of their location.

Every other jurisdiction has required 'no worse off' payments since the new standard took effect, and that has come at a considerable price.

— Productivity CommissionDescribing the financial impact of the GST deal.

The Productivity Commission's preferred solution is radical: dismantle the current deal's framework and revert to a pre-2018 system, directly addressing the distortions caused by Western Australia's mining revenue dominance. This recommendation has ignited a fierce inter-state debate.

the 2018 changes had weakened that principle without delivering sufficient improvements elsewhere.

— Productivity CommissionAssessing the impact of the GST reforms on public services.

While South Australia, New South Wales, Victoria, and Queensland have welcomed the findings, Western Australian Premier Roger Cook has vehemently opposed them. Cook criticized the report as being driven by "east coast clowns" and warned that any change would "punish Western Australia for its success, simply to prop up other lazy states." Albanese has reportedly assured Cook that current GST arrangements will remain, though his public statements have been more cautious.

the current GST carve up was a 'dog of a deal,'

— South AustraliaReacting to the commission's interim findings.
DistantNews Editorial

Originally published by ABC Australia in English. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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