WA's $60 billion GST 'gift' is a 'costly mistake' but will remain

A deal struck in 2018 to guarantee Western Australia a larger share of Goods and Services Tax (GST) revenue, initially projected to cost the federal budget an extra $5 billion over six years, has ballooned into a $60 billion liability by 2030. The agreement, designed to address a political backlash in the mining state where its GST revenue share had fallen to 30 cents per dollar collected, promised a "floor" of at least 75 cents for every dollar raised.

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costly mistake

Economists like Saul Eslake have labeled the 2018 "gift to the west" as the "worst deal in policy history." Despite the significant financial cost, the deal did not prevent the Liberal Party from losing five seats in Western Australia during the 2022 federal election. Labor, which had pledged to maintain the GST deal, ultimately benefited from the state's political sentiment.

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clowns

The Productivity Commission, undertaking a review at the government's request, advised that the deal should be scrapped, characterizing it as a "costly mistake" that exacerbates inequality among the states. This recommendation offered a glimmer of hope for critics seeking to change the arrangement.

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dodgy, deceitful

However, Prime Minister Anthony Albanese has vowed to maintain the deal, despite acknowledging the $60 billion blow-out. Standing alongside him was West Australian Premier Roger Cook, who had previously insulted Productivity Commission public servants. Treasurer Jim Chalmers defended the commission's staff, calling Cook's remarks "unfortunate." Albanese, who credits the electoral swing in Western Australia with securing his prime ministership, appears unwilling to jeopardize his political standing in the state by altering the GST arrangement.

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dumb