The Federal Government’s key independent adviser on GST distribution has reinforced that the current model has been working as intended.
This would mark the first time WA’s share has risen above 75 cents in the dollar since the GST relativity floor was introduced in 2018.
Despite the increase, WA would still receive just 9.1% of the GST pool while accounting for 11.1% of Australia’s population.
CCIWA Chief Economist Dr Daniel Kiely said the GST model had been working, with the relativity floor providing budget certainty to all states.
GST floor providing stability
The current GST model was introduced in 2018 to address volatility in the previous system and provide states with greater budget certainty.
The reforms – including the 0.75 relativity floor – helped stabilise state finances and support long-term economic planning.
CCIWA’s submission stated the reforms created a “more stable system” that encouraged investment and long-term growth.
Kiely said the current arrangements were particularly important for states exposed to volatile commodity markets.
“Without this deal, WA would be $6.6b worse off next financial year,” he said.
“That impacts our ability to deliver our services and grow the economy, with WA businesses contributing substantial amounts to the national budget, which benefits all Australians.”
The CGC also noted that all states were expected to receive higher GST distributions in 2026-27. However, falling iron ore prices could weigh on WA’s future budget position.
Certainty for state budgets
Kiely said the GST floor provided an important safeguard against economic cycles.
“All states can experience boom and bust. It might be Victoria today, it could be WA tomorrow,” he said.
“The floor keeps the system fair for all states and territories and gives governments certainty to plan their budgets.”
CCIWA’s submission to the Productivity Commission review claimed the 2018 GST reforms should be maintained, while making targeted adjustments to improve fairness and transparency in the distribution formula.
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