This ignited white-hot anger in WA that the state was being shortchanged by the tax, which prompted the former Coalition government and its treasurer at the time, Scott Morrison, to negotiate a 70-cents-in-the-dollar floor past which no state’s share could drop.
That floor rose to 75 cents this year.
Top-up payments, known as the “no-worse-off guarantee”, were introduced to get the other states on board with the deal. These payments mean no other state receives less than it would have under the 2018 deal compared to the old arrangement.
Without the deal, WA government figures suggest the state would currently be receiving just 18 cents in the dollar from the GST pool – or around $2 billion. Instead, WA will receive $7.8 billion this year.
Who doesn’t like the deal?
WA GST advertising material.
The top-up payments are the source of the greatest controversy.
Those payments were only meant to cost the Commonwealth $9 billion over 10 years, but persistently high iron ore royalties have ballooned total no-worse-off payments to roughly $6 billion per year.
Economists like Saul Eslake describe it as the “worst public policy of the 21st century” and a corruption of the horizontal fiscal equalisation process.
Both the Coalition and Labor have consistently committed to the deal in the long term over fears the WA voting public could turn against them.
Eslake told this masthead in September that the deal was made for purely political reasons to keep West Australian voters onside ahead of the 2022 and 2025 federal elections.
WA Premier Roger Cook.Credit: Matt Jelonek
“I don’t blame WA for trying to screw as much money out of Canberra as it possibly can. That’s a KPI for state governments,” Eslake said.
“I blame federal politicians on both sides for either unintentionally falling for fatuous arguments from WA or actually, and probably more likely, giving into those arguments, even though they know they’re fatuous and for the basest of political reasons.”
OK, so what’s a ‘fairness fighter’?
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The future of the 2018 deal is somewhat uncertain, with the Productivity Commission review into how it’s working ramping up over the next year and public submissions being invited from February next year.
Treasurer Jim Chalmers will receive the final report in 2027 and make a call on whether to tinker with or leave the arrangement in place.
Cook and Saffioti are desperate to keep the current arrangement in place because it has helped them deliver multibillion-dollar budget surpluses at a time when other state budgets plunge deeper into the red – and while WA Labor’s own major projects blow out by billions.
Despite assurances from Chalmers, Prime Minister Anthony Albanese and successive Coalition leaders, Cook and Saffioti have been worried enough to assemble a “fairness fighter” team (mostly made up of bureaucrats from WA Treasury) and launch an ad blitz.
“[An ad spend of] $1 million to protect over $6 billion of GST funding, I think, is something that’s worth spent,” Saffioti told reporters on Monday ahead of her flight to Canberra.
Saffioti’s team has also begun reaching out to east coast media and industry organisations to provide briefings on their visit – including some journalists from this masthead.
At the heart of the blitz is Saffioti’s argument that WA’s share is still the lowest in the country and the GST system works for Australia – because economic growth in WA means economic growth everywhere.
Saffioti said pressure was being applied to Chalmers and Albanese from commentators, the media, and other politicians from both major parties.
“This is about making sure everyone understands that this isn’t just about WA, this is the national interest, and they’re eroding our ability to drive jobs and economic development, which impacts the national economy,” Saffioti said.
“It’s also about gaining some respect, to be honest, we always get criticised for our situation, but it’s an outcome that’s been on the back of incredible hard work of hundreds of thousands or millions of Western Australians.”
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