GST Deal Under Scrutiny: Productivity Commission Calls 2018 Reform a Costly Mistake

On August 14, 2026, the Productivity Commission (PC) delivered an interim report evaluating the 2018 Goods and Services Tax (GST) allocation reform introduced by former Treasurer Scott Morrison. The PC concluded that the reform has “failed to meet its intent” and has become “a costly mistake” that disproportionately benefits Western Australia (WA) while imposing a growing fiscal burden on the Commonwealth. The commission warned that the policy could cost federal taxpayers up to $12 billion per year if iron-ore prices remain high.

Productivity Commission lambasts WA's GST deal

The 2018 deal was negotiated after WA’s GST share fell sharply during a mining-boom-induced recession. Morrison’s reform introduced a “no-worse-off” guarantee and a floor that prevented any state from receiving a lower per-person GST share than New South Wales (NSW) or Victoria. Under the arrangement, WA’s share was topped up to 75 cents of every dollar of GST it raised, creating a two-tier system. The guarantee was later extended by the Albanese government to 2030.

The Sydney Morning Herald

• $23 billion spent since 2018 on “no-worse-off” payments.

Productivity Commission lambasts WA's GST deal

• PC projects the total cost to reach $60 billion by 2029-30.

The Guardian

• In 2024-25, WA received 113 % of its assessed GST need; other jurisdictions averaged 98 %.

Nine.com.au

• If iron-ore prices rise from US$95 to US$200 per tonne, the annual cost could climb to $12 billion.

Productivity Commission lambasts WA's GST deal

Prime Minister Anthony Albanese reiterated that WA “deserves a fair deal” and that the federal government will continue to honour the guarantee. Queensland Treasurer David Janetzki described the system as “unfair” and urged Treasurer Jim Chalmers to choose between defending a broken arrangement or supporting the national interest. WA Premier Roger Cook launched a campaign to protect the deal, arguing that any change would jeopardise WA’s fiscal stability.

The Guardian

• The PC’s interim analysis cites $23 billion spent to date, while some media summaries describe the overall impact as a $60 billion “GST fiasco.” Both figures refer to different scopes (cumulative spend versus projected total cost).

The Guardian

• Forecasts for the annual cost vary: the PC notes an original estimate of $5 billion by 2024-25, yet later statements warn the cost could rise to $12 billion per year under high iron-ore prices.

The Guardian

• “If a state like South Australia improves its fiscal position, they get less GST because they are considered to need it less,” — Angela Jackson, commissioner

The Guardian

• “The system should be brought back to its core purpose: ensuring that all states and territories are able to offer Australians a similar standard of services and infrastructure no matter where they live,” — Alex Robson, commission deputy chair

The Guardian

The PC will hold hearings throughout September and issue a final report by December 31. It has outlined three reform options: (1) revert to the pre-2018 system with Treasury-directed adjustments; (2) retain the framework but make targeted direct payments; or keep the 75-cent floor and make the “no-worse-off” guarantee permanent. The outcome will shape GST distribution ahead of the 2028 federal election.

Productivity Commission lambasts WA's GST deal