Western Australia’s battle to keep its fair share of the GST has officially begun, with the release of Terms of Reference for the Productivity Commission’s review of how the tax is distributed to the states.
The 2018 deal, which secured WA a 75-cent floor in GST revenue and delivered fairness to the GST system for the first time since its introduction, is up for review in 2026.
Announcing the release of the terms of reference, Federal Treasurer Jim Chalmers said “it’s about making sure these arrangements are delivering the best value for states and territories, as well as hardworking Australian taxpayers”.
“The Productivity Commission Inquiry will look at ways in which the federal financial relations system can best promote fiscal sustainability across the states and territories and the Commonwealth,” he said.
“The PC will investigate whether the current arrangements are working efficiently, effectively and as intended, while being cognisant of the Commonwealth’s policy commitments in relation to GST distribution, and with Terms of Reference that are deliberately broad enough to enable it to look into issues raised by states and territories.”
The Productivity Commission will invite the public to make submissions on any matter raised by the Terms of Reference.
An interim report will be provided to Government by August 28, 2026 and a final report before December 31, 2026.
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A watershed moment
CCIWA Chief Economist Aaron Morey said the review will be a watershed moment for the future of Western Australia’s economy.
“The Prime Minister promised during the election campaign that WA’s current GST deal would stay in place, but we know he’s under significant pressure from East Coast governments and commentators to break that promise,” he said.
“Without that deal in 2018, WA would be getting back just 18 cents for every dollar we pay in GST, which adds up to around $6 billion less in this financial year alone.
“That would hamstring WA from developing the infrastructure we need to continue to power the national economy.”
WA gets smallest return
Morey said even under the current system, WA received the smallest return on the GST of any state, with 75c still lower than any other state had ever received.
“Other states should be focusing more on developing their own economies like WA has done, rather than throwing stones over a common-sense reform that is clearly in the national interest,” he said.
“The deal to lock in the 75c floor was a significant win for the country.”
CCIWA was instrumental in securing the 2018 GST deal and will again play a central role in advocating for a fair go for WA.
“We’ve once again enlisted four titans of WA business – Nigel Satterley, Andrew Forrest, John Poynton and Michael Chaney – to sit on our GST Deal Defenders Steering Committee,” Morey said.
“In partnership with the Western Australian government and other interest groups, we’re ready for a tough fight in 2026 to ensure WA is not ripped off again.”
WA Treasurer Rita Saffioti said the State Government was unwavering in its commitment to maintaining a fair share of GST for Western Australia.
‘Fighting extremely hard’
“We will be fighting extremely hard throughout this Productivity Commission review period to ensure that the 2018 GST reforms remain intact,” she said.
“Without the 2018 reforms, WA would be left with a grossly inadequate and unsustainable share of GST, undermining our ability to invest in the critical economic infrastructure and supporting services required to ensure the continuing prosperity of our State and the nation.
“We know that the Albanese Government is acutely aware and has supported maintaining the 2018 reforms, but we also know there are many on the east coast advocating for the reforms to be removed. We can’t allow those critical voices to shape the debate.”
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