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Productivity Commission Slams 2018 WA GST Deal, Costs Soar

8/14/2026

Summary

Productivity Commission Condemns

The Productivity Commission’s interim report condemns the 2018 GST deal with Western Australia as a costly mistake.
It says the deal has cost taxpayers nearly $23 billion and is projected to hit $60 billion by 2029-30, far above the $5 billion 2024-25 forecast.
The commission proposes three options, preferring a return to the pre-2018 distribution system, while no-worse-off payments could rise from $6.4 billion in 2024-25 to $12 billion annually if iron-ore prices stay high.

Summary

Productivity Commission Reviews

The Productivity Commission will hold hearings on its interim GST report in September and issue a report on 31 December 2026.
It dismissed Western Australia’s claim that the pre-2018 GST formula discouraged reforms, found no evidence, and proposed letting treasurer direct Commonwealth Grants Commission to adjust GST shares for commodity-dominant states.
It suggested replacing the blanket “no-worse-off” guarantee with targeted grants to Western Australia to offset GST loss under a restored pre-2018 system.

History

Historical Context

After the Howard government launched Australia’s Goods and Services Tax in 1999, Treasurer Peter Costello earmarked the levy to fund state services via the Commonwealth Grants Commission. A later Western Australia GST agreement revived the original allocation model, prompting the Productivity Commission to advise reverting to the pre-deal formula to protect fiscal balance.

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Productivity Commission Condemns

The Productivity Commission’s interim report condemns the 2018 GST deal with Western Australia as a costly mistake.
It says the deal has cost taxpayers nearly $23 billion and is projected to hit $60 billion by 2029-30, far above the $5 billion 2024-25 forecast.
The commission proposes three options, preferring a return to the pre-2018 distribution system, while no-worse-off payments could rise from $6.4 billion in 2024-25 to $12 billion annually if iron-ore prices stay high.

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