"The Morrison government’s decision to give a special deal to Western Australia
for the distribution of the income from the goods and service tax is one of the
worst public policy decisions made in Australia in the past two decades.
The departure of the WA premier and treasurer, Mark McGowan, this week gives us
an opportunity to fix the mistake.
Under a deal struck by McGowan and then-federal Treasurer Scott Morrison in
2018, WA gets a much greater share of the centrally collected goods and
services tax (GST) than it is entitled to under the formula administered by the
Commonwealth Grants Commission.
At the time, the formula awarded the state only 45% of what it would have
gotten if it had received all of the GST collected from its citizens, in
recognition of its lesser need for support because of its high iron ore
Morrison and McGowan’s deal placed a floor on how much of the GST each state
could get. This climbed to 70% of what was collected from its citizens in
2022-23, and will climb further to 75% from 2024-25.
The other states that miss out because WA gets more than it should receive a
top-up from the Commonwealth government, originally costed at $293 million in
2021-22, but now estimated to be $4.1 billion. But this is not “free”. The
extra billions have to be paid for by Australian taxpayers."
*** Xanni ***
Chief Scientist, Xanadu
Partner, Glass Wings
Manager, Serious Cybernetics