Peter van Onselen: Albo’s desperate plan to save Labor’s seats exposed – and it’s the rest of Australia that could pay
The article argues that Anthony Albanese’s commitment to retain Western Australia’s favourable GST distribution could ultimately shift costs to other states or Commonwealth taxpayers. It focuses on remarks suggesting that future federal funding arrangements with states may be considered alongside the GST deal, a prospect criticised by NSW Premier Chris Minns.
The columnist says the policy, originally introduced under Scott Morrison in 2018 and continued by Labor, has cost the Commonwealth almost $23 billion while leaving WA about $22 billion better off, citing the Productivity Commission. It notes that NSW has 31 per cent of Australia’s population but receives 26 per cent of GST revenue, and portrays the dispute as both a budget issue and an electoral concern for Labor.
- WA’s GST guarantee may affect other federal-state funding.
- The arrangement has cost the Commonwealth billions.
- Eastern state leaders oppose the policy.
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Australia’s goods and services tax, or GST, is collected nationally and then shared between the states and territories. The aim is to give each government enough money to provide broadly similar public services, taking account of its population, economy and the costs it faces.
Western Australia’s share became a major political issue after its mining revenues rose and its GST payments fell under the earlier system. In 2018, the Morrison government introduced a new guarantee that set a minimum level for the state’s GST share, and subsequent governments have maintained it.
The arrangement can affect the federal budget because the Commonwealth may provide extra money to ensure other states are not immediately worse off. State leaders, including those in New South Wales, have argued that any changes to related funding should be considered carefully because they could influence how much money is available for services and infrastructure elsewhere.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Supporters of retaining the arrangement argue that Western Australia should have a stable, predictable share of GST revenue after years in which its mining strength led to unusually low returns from a tax paid by its residents and businesses. They contend that abrupt changes would undermine long-term state planning and revive a grievance that national fiscal arrangements penalise economic success. On this view, any wider funding changes should recognise WA’s service costs, contribution to the national economy and legitimate expectation of policy continuity.
The case against
Critics argue that the GST system should primarily equalise states’ capacity to provide comparable public services, rather than guarantee a comparatively well-resourced state an advantaged outcome. They say the Commonwealth’s compensating payments place a real cost on taxpayers and can leave other states with less support relative to their needs, especially as budgets tighten. From this perspective, reviewing the guarantee and related federal transfers is prudent fiscal stewardship, provided it is done transparently and fairly for every state.