{"id":854669,"date":"2026-08-14T06:32:15","date_gmt":"2026-08-14T06:32:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/854669\/"},"modified":"2026-08-14T06:32:15","modified_gmt":"2026-08-14T06:32:15","slug":"a-60-billion-gst-fiasco-report-condemns-morrison-deal-as-perverse","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/854669\/","title":{"rendered":"A $60 billion GST fiasco: Report condemns Morrison deal as perverse"},"content":{"rendered":"

\"Shane<\/p>\n

August 14, 2026 \u2014 2:00pm<\/p>\n

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The system that carves up $102 billion worth of GST between the states and territories is so broken that a bushfire in NSW would deliver a multimillion-dollar financial windfall to the state with the strongest finances in the country while hurting every other part of the nation.<\/p>\n

A scathing interim report by the Productivity Commission into the GST allocation system put in place by Scott Morrison in 2018 labels the deal a \u201cmistake\u201d that could end up costing federal taxpayers up to $12 billion a year or more than is spent on the nation\u2019s air force.<\/p>\n

\"AA bushfire in NSW would lead to extra revenue for Western Australia under the \u201cperverse\u201d GST deal.Getty Images<\/p>\n

As revealed by this masthead<\/a>, the commission found the current allocation system is on track to cost federal taxpayers up to $60 billion and is failing all of its key objectives while making the annual GST carve-up less equitable and more complex.<\/p>\n

The 2018 deal was put in place after a collapse in Western Australia\u2019s share of the GST despite the state being in a domestic recession caused by the end of the decade\u2019s mining boom.<\/p>\n

Morrison, the then treasurer, came up with a new system that topped up Western Australia\u2019s share until it received the equivalent of 75\u00a2 for every dollar of GST notionally raised by the state. It would then change to the current system, where no jurisdiction can get a smaller share of each dollar raised than either NSW or Victoria.<\/p>\n

A \u201cno-worse-off\u201d guarantee was put in place, which has been extended by the Albanese government, to 2030, that ensures the GST of every other state and territory is not reduced.<\/p>\n

The Productivity Commission report, delivered to the nation\u2019s treasurers on Friday, found the 2018 deal had effectively created a two-tier GST allocation system where only one state \u2013 Western Australia \u2013 got ahead.<\/p>\n<\/p>\n

Commission deputy chair Alex Robson said the GST system was meant to deliver each state and territory enough cash so they could provide similar levels of services and infrastructure to their residents.<\/p>\n

Instead, the 2018 reforms had undermined that principle while also not working as the Morrison government had expected.<\/p>\n

Related Article\"West<\/a><\/p>\n

\u201cThe 2018 changes tried to achieve too much and moved too far away from the system\u2019s core objective,\u201d he said.<\/p>\n

\u201cThe result is a system that is now more complex, less consistent and more costly. If the government wants to support other objectives, they could do so outside the GST distribution system.\u201d<\/p>\n

The commission found the 2018 changes had created perverse outcomes, almost all of which benefit Western Australia at the expense of the rest of the federation and federal taxpayers.<\/p>\n

Commissioner Angela Jackson said under the pre-2018 allocation system, if NSW suffered a substantial bushfire, then it would receive extra GST to deal with the disaster\u2019s impact. That extra money would come from every other state and territory.<\/p>\n

But that has been upended by a \u201cperverse\u201d system under which NSW\u2019s share of the GST is a floor, below which no other state or territory\u2019s share of the tax can fall. That means Western Australia gains a windfall from a NSW disaster while the government of NSW would receive slightly less.<\/p>\n

\u201cUnder the current system, if New South Wales is hit by a natural disaster and spends money on the recovery, it receives more GST to reflect its increased need,\u201d she said.<\/p>\n

\u201cBut under the standard state benchmark, Western Australia also receives more GST from the other states, for a natural disaster it didn\u2019t have.\u201d<\/p>\n

Victoria could end up in the same position as NSW if, as expected, its share of GST declines over the next few years.<\/p>\n

Not only is Western Australia better off from a NSW bushfire, an increase in the price of iron ore \u2013 which would previously be shared among the rest of the federation \u2013 means it could keep the windfall from higher mining royalties and enjoy an increase in the GST pool.<\/p>\n

\"WestWest Australian Premier Roger Cook and Treasurer Rita Saffioti launched a campaign to protect the GST deal.WAtoday<\/p>\n

If iron ore prices, currently around $US95 a tonne, were to climb towards $US200 a tonne, then under the 2018 system the annual cost to federal taxpayers of not leaving states and territories worse off would reach $12 billion.<\/p>\n

The 2018 system has delivered Western Australia so much extra revenue that the federal government would have to find $47 billion in a single year to share with every other jurisdiction to match Western Australia\u2019s financial position.<\/p>\n

The commission\u2019s report also rejects claims by the WA government that the old GST system encouraged states not to undertake major economic reforms, finding there was no evidence of the practice.<\/p>\n

The WA government is demanding no changes to the 2018 deal while both the Albanese government and Taylor opposition have said they support the current system.<\/p>\n

Related Article\"Scott<\/a><\/p>\n

The Productivity Commission, however, has offered three possible changes. They include returning to the pre-2018 system but with the federal treasurer able to direct the Commonwealth Grants Commission, which calculates the annual GST carve-up, to take into account situations where a single state may have a dominant financial position in a particular part of the economy.<\/p>\n

This would enable the commission to discount the way WA is effectively the only producer of iron ore, or how Queensland and NSW are the largest producers of black coal.<\/p>\n

Another option is to return to the pre-2018 system with the federal government then making direct grants to WA to offset its small share of the GST.<\/p>\n

Before the report\u2019s release, Prime Minister Anthony Albanese reassured West Australians they would continue to get a \u201cfair deal\u201d under the GST system.<\/p>\n

\u201cI assure Western Australians of this \u2013 you will get your fair share because your work and what you contribute to the national economy really counts,\u201d he said.<\/p>\n

\u201cThe Commonwealth picks up the additional costs to the states and territories. The no worse off guarantee to the states and territories ensures WA has got additional funding, but not at the expense of other states and territories.\u201d<\/p>\n

The commission plans to hold hearings into its interim report through September, with a final report due by year\u2019s end.<\/p>\n

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter<\/a>.<\/p>\n

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\"ShaneShane Wright<\/a> is a senior economics correspondent for The Sydney Morning Herald and The Age.Connect via X<\/a> or email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"August 14, 2026 \u2014 2:00pm Save You have reached your maximum number of saved items. Remove items from…\n","protected":false},"author":2,"featured_media":854670,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[64,63,44],"class_list":["post-854669","post","type-post","status-publish","format-standard","has-post-thumbnail","category-australia","tag-au","tag-australia","tag-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/854669","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=854669"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/854669\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/854670"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=854669"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=854669"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=854669"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}