GST distribution dispute
{{Short description|Political controversy over tax revenue in Australia}}
{{good article}}
{{Use dmy dates|date=October 2021}}
{{Use Australian English|date=October 2021}}
The GST distribution dispute is an ongoing political controversy concerning the distribution of goods and services tax (GST) revenue amongst the Australian states and territories and the federal government. The dispute was originally based upon Western Australia's (WA) dissatisfaction with its low returns, which led to reform in 2018. The 2018 reform guarantees all states and territories a minimum return on their contribution.
As a result of WA's improved financial position during and after the COVID-19 pandemic, debate has since centred around the suitability of the minimum payments floor introduced and the perceived inequity of the reform. Currently, the federal government provides a "no worse-off guarantee", meaning that states and territories receive either the funding they would have under the old system or the new system, whichever is higher. This prevents the reform causing disadvantage to any jurisdiction during the transition period, which will expire in 2029–30. Several states have held inquiries and have alternatively demanded the federal government undo the reform or continue contributing to the GST pool. The Commonwealth Grants Commission, which is responsible for calculating the GST shares paid to each state and territory, is scheduled to review the GST scheme twice by 2027.
Critics have pointed to the high cost the federal government incurs subsidising states under the no worse-off guarantee and the relative inequity in funding that the reform introduced. Alternative proposals have been made to suggest the use of a per capita distribution system. Supporters of the reform contest that WA can not be expected to indefinitely subsidise other states, that undoing the reform would disincentivize WA from developing its natural resources, and that gambling taxes (which are a major source of revenue in the eastern states) should be included in the distribution calculation just as mining royalties are. The reforms continue to be supported by both the Coalition and the Labor Party at a federal level, and both have campaigned on their support for the reform. Despite the criticism and proposed alternatives, it is generally understood that altering the distribution arrangements would be political suicide due to WA's status as the key swing state in federal elections.
Background
{{See also|Goods and services tax (Australia)}}
The GST system was originally legislated by the Howard government (Coalition) in 1999 and introduced in 2000. It is a value-added tax set at 10% of the price of most goods and services sold in the country. Upon its introduction, it replaced several state taxes as part of a broader taxation reform.{{Cite web|last1=Reinhardt|first1=Sam|last2=Steel|first2=Lee|date=4 September 2006|title=A brief history of Australia's tax system|url=https://treasury.gov.au/publication/economic-roundup-winter-2006/a-brief-history-of-australias-tax-system|url-status=live|access-date=13 October 2021|website=Treasury.gov.au|publisher=Department of the Treasury|archive-date=19 May 2021|archive-url=https://web.archive.org/web/20210519125526/https://treasury.gov.au/publication/economic-roundup-winter-2006/a-brief-history-of-australias-tax-system}}
In Australia, GST revenue is paid to a central pool and then distributed between the states and territories according to the principle of horizontal fiscal equalisation (HFE). The HFE system is designed to equalise revenue between the states and remedy fiscal imbalance. Recommendations for the rate of return for each state and territory are made by the Commonwealth Grants Commission (CGC), originally with the goal of providing equal quality government services between all states.{{Cite web|last=Freeman|first=Greg|date=14 June 2018|title=Fiscal Equalisation|url=https://www.cgc.gov.au/about-us/fiscal-equalisation|url-status=live|access-date=13 October 2021|website=CGC.gov.au|publisher=Commonwealth Grants Commission|language=en|archive-date=11 April 2021|archive-url=https://web.archive.org/web/20210411161129/https://www.cgc.gov.au/about-us/fiscal-equalisation}}
Origins
File:Brockman 4 Process Plant, July 2019 03.jpg
WA's budget is supported in large part by resource royalties. The GST return received by WA was relatively steady from 2000 to the mid-2000s, taking its first plunge as the iron ore and gas boom began and resource tax revenue rose dramatically. To account for the rise in resource royalties revenue, the CGC began to reduce WA's GST share and increase the share of other states and territories. It was during this time that the state's criticism of HFE first began. By 2010, the share was around 70 cents per dollar, and this continued to decline until the reforms were imposed.{{cite news |last=Prior |first=Neale |date=9 October 2021 |title=GST for Dommies |page=38 |work=The West Australian |publisher=Seven West Media |location=Perth |editor-last=De Ceglie |editor-first=Anthony |editor-link=Anthony De Ceglie |issn=0312-6323}}
WA ran in deficit for much of the 2010s, and Premier Colin Barnett (Liberal) consistently blamed these deficits on a lack of GST revenue,{{Cite web |last=Jericho |first=Greg |author-link=Greg Jericho |date=13 April 2015 |title=Colin Barnett's GST rhetoric is finding blame for WA's shambolic budget |url=http://www.theguardian.com/business/grogonomics/2015/apr/13/colin-barnetts-gst-rhetoric-is-finding-blame-for-was-shambolic-budget |url-status=live |archive-url=https://web.archive.org/web/20201108125822/http://www.theguardian.com/business/grogonomics/2015/apr/13/colin-barnetts-gst-rhetoric-is-finding-blame-for-was-shambolic-budget |archive-date=8 November 2020 |access-date=9 October 2021 |website=The Guardian |language=en}} particularly given the state's GST share fell at the same time as iron ore royalties. This was due to the "lag" in the HFE system, since the CGC included royalty revenues in their calculations based on a three-year projection.{{Cite web |last=Grattan |first=Michelle |author-link=Michelle Grattan |date=2015-04-10 |title=The wild west presents yet another taxing issue for Hockey and Abbott |url=http://theconversation.com/grattan-on-friday-the-wild-west-presents-yet-another-taxing-issue-for-hockey-and-abbott-39926 |url-status=live |archive-url=https://web.archive.org/web/20211104195303/https://theconversation.com/grattan-on-friday-the-wild-west-presents-yet-another-taxing-issue-for-hockey-and-abbott-39926 |archive-date=4 November 2021 |access-date=2021-11-01 |website=The Conversation |language=en |issn=2201-5639}}{{Cite book |last=Stewart |first=Miranda |chapter-url=https://link.springer.com/chapter/10.1007/978-3-030-97258-5_1 |title=The Forum of Federations Handbook of Fiscal Federalism |date=2023 |publisher=Palgrave Macmillan |isbn=9783030972578 |editor-last=Tremblay |editor-first=Jean-François |location=Cham, Switzerland |pages=29,31 |language=en |chapter=Australia |doi=10.1007/978-3-030-97258-5_1 |via=Springer Link}} For example, in 2014–15 GST relativities were calculated based on the assumption that iron ore was trading for $118 per tonne, when in reality the price was $37.70.{{Harvnb|Nahan|2017|pages=76-77}} The state had accumulated debt of around A$30 billion by the financial year 2016–17. That year, the state ran a budget deficit of $3.9 billion. In 2016–17, $4 billion of WA's GST revenue had been distributed to other states. Prime Minister Malcolm Turnbull (Liberal) subsequently committed to implementing a GST floor to ensure a minimum rate of return for all states and territories, but said it would not be implemented until WA's share had risen to around 75 cents in the dollar under the HFE system, which was not projected to occur for at least another four years. The commitment was heavily criticised by the state Labor opposition, who argued that federal government had given no timeline for change.{{Cite news|last=O'Connor|first=Andrew|date=13 August 2016|title='Every right to feel aggrieved': PM commits to GST review|language=en-AU|work=ABC News|publisher=Australian Broadcasting Corporation|url=https://www.abc.net.au/news/2016-08-13/pm-malcolm-turnbull-commits-to-gst-floor-plan-barnett/7731878|access-date=9 October 2021|archive-date=4 May 2021|archive-url=https://web.archive.org/web/20210504120014/https://www.abc.net.au/news/2016-08-13/pm-malcolm-turnbull-commits-to-gst-floor-plan-barnett/7731878|url-status=live}}
Change in state government
| class="wikitable sortable plainrowheaders floatright"
|+GST return by state (FY2017–18){{Cite report |url=https://www.cgc.gov.au/sites/default/files/2017_update_report.pdf?v=1534214971 |title=Report on GST Revenue Sharing Relativities, 2017 Update |date=10 March 2017 |publisher=Commonwealth Grants Commission |location=Canberra |page=2 |isbn=9780992395452 |access-date=9 October 2021 |archive-url=https://web.archive.org/web/20210306043116/https://www.cgc.gov.au/sites/default/files/2017_update_report.pdf?v=1534214971 |archive-date=6 March 2021 |format=PDF |url-status=live}} !scope=col| State/territory !scope=col| {{Abbr|GST return|GST return, represented in dollars received per dollar paid}} |
| scope=row| {{Flagicon|Western Australia}} Western Australia
|0.34434 |
|---|
| scope=row| {{Flagicon|Australian Capital Territory}} Australian Capital Territory
|1.19496 |
| scope=row| {{Flagicon|New South Wales}} New South Wales
|0.87672 |
| scope=row| {{Flagicon|Northern Territory}} Northern Territory
|4.66024 |
| scope=row| {{Flagicon|Queensland}} Queensland
|1.18769 |
| scope=row| {{Flagicon|South Australia}} South Australia
|1.43997 |
| scope=row| {{Flagicon|Tasmania}} Tasmania
|1.80477 |
| scope=row| {{Flagicon|Victoria}} Victoria
|0.93239 |
File:Mark McGowan headshot.jpg
By 2017 the existing system had resulted in a situation in which WA was paid approximately 34 cents for every dollar of GST it raised. The next lowest share was received by New South Wales (NSW), who received approximately 88 cents in the dollar, with the highest sharing being the approximately 466 cents to the dollar paid to the Northern Territory.
The newly elected McGowan government (Labor) in WA had been relying upon a GST payment of 38 cents to the dollar to help return the state budget to surplus by 2019–20 financial year. Although 34 cents in the dollar was an improvement on the 2016–17 rate of approximately 30 cents in the dollar, the reduction left the state with $241 million less than expected for the 2017–18 state budget. State treasurer Ben Wyatt (Labor) called the situation a "joke" and requested a top-up payment of $226 million, claiming the state was "in the fourth year of what is effectively a domestic recession". Federal treasurer Scott Morrison (Liberal) said he would consider the request for additional payments. Senator for WA Dean Smith (Liberal) also weighed in, calling HFE "terminally diseased".{{Cite news|last=Gustafson|first=Iain|date=24 March 2017|title=WA facing budget black hole as GST share revised down|language=en-AU|work=ABC News|publisher=Australian Broadcasting Corporation|url=https://www.abc.net.au/news/2017-03-24/wa-gst-share-falls-to-lower-than-forecast-budget-in-trouble/8384344|access-date=9 October 2021|archive-date=24 November 2020|archive-url=https://web.archive.org/web/20201124155251/https://www.abc.net.au/news/2017-03-24/wa-gst-share-falls-to-lower-than-forecast-budget-in-trouble/8384344|url-status=live}}
However, Turnbull again stated that no floor would be introduced until WA's share had been raised to between 70 and 75 cents to the dollar under the HFE system,{{Cite news|last=Kagi|first=Jacob|date=22 March 2017|title=New WA Premier urges PM to 'show backbone' on GST reform|language=en-AU|work=ABC News|publisher=Australian Broadcasting Corporation|url=https://www.abc.net.au/news/2017-03-22/mark-mcgowan-urges-malcolm-turnbull-to-get-a-backbone-on-gst/8376598|access-date=9 October 2021|archive-date=6 June 2017|archive-url=https://web.archive.org/web/20170606064857/http://www.abc.net.au/news/2017-03-22/mark-mcgowan-urges-malcolm-turnbull-to-get-a-backbone-on-gst/8376598|url-status=live}} which was not projected to occur for at least four years. He added that no change could occur without the agreement of other states and territories,{{Cite news|last=O'Connor|first=Andrew|date=20 March 2017|title=GST row flares as Turnbull challenges new WA Government|language=en-AU|work=ABC News|publisher=Australian Broadcasting Corporation|url=https://www.abc.net.au/news/2017-03-20/prime-minister-challenges-wa-mcgowan-government-over-gst/8369076|access-date=9 October 2021|archive-date=19 June 2017|archive-url=https://web.archive.org/web/20170619001534/http://www.abc.net.au/news/2017-03-20/prime-minister-challenges-wa-mcgowan-government-over-gst/8369076|url-status=live}} which WA Premier Mark McGowan (Labor) asserted was false given the CGC was a federal body. Senator for Queensland Pauline Hanson (One Nation) said she would support a reduction in Queensland's payments to improve WA's share, but backtracked when asked to clarify her comments by the Queensland state government.{{Cite news|last=O'Brien|first=Chris|date=9 March 2017|title=Pauline Hanson contradicts herself on GST share for WA, Queensland|language=en-AU|work=ABC News|publisher=Australian Broadcasting Corporation|url=https://www.abc.net.au/news/2017-03-09/pauline-hanson-contradicts-gst-share-stance-wa-qld/8338798|access-date=9 October 2021|archive-date=1 February 2021|archive-url=https://web.archive.org/web/20210201220702/https://www.abc.net.au/news/2017-03-09/pauline-hanson-contradicts-gst-share-stance-wa-qld/8338798|url-status=live}}
WA Opposition Leader Mike Nahan (Liberal) went as far as to suggest that his party would sue the federal government in the High Court.{{Harvnb|Nahan|2017|p=77}}{{Cite news |last=Powell |first=Graeme |date=2017-08-27 |title=WA GST distribution High Court challenge pits WA Liberals against Malcolm Turnbull |language=en-AU |work=ABC News |publisher=Australian Broadcasting Corporation |url=https://www.abc.net.au/news/2017-08-28/turnbull-government-facing-gst-high-court-challenge-from-wa-libs/8847762 |access-date=2023-10-16 |archive-date=12 November 2020 |archive-url=https://web.archive.org/web/20201112030858/https://www.abc.net.au/news/2017-08-28/turnbull-government-facing-gst-high-court-challenge-from-wa-libs/8847762 |url-status=live }} He stressed that WA "want no more taxation, but fair distribution of existing revenue raised."{{Harvnb|Nahan|2017|p=78}} However, state Attorney-General John Quigley (Labor) rejected the idea, stating that he had already received legal advice which ruled out that possibility.{{Cite news |last=Bell |first=Frances |date=2017-08-28 |title=WA Liberals' GST High Court challenge against Malcolm Turnbull's Government ridiculed |language=en-AU |work=ABC News |publisher=Australian Broadcasting Corporation |url=https://www.abc.net.au/news/2017-08-28/gst-challenge-mooted-by-wa-liberals-dismissed-as-errant-nonsense/8848914 |access-date=2023-10-16 |archive-date=12 November 2020 |archive-url=https://web.archive.org/web/20201112014844/https://www.abc.net.au/news/2017-08-28/gst-challenge-mooted-by-wa-liberals-dismissed-as-errant-nonsense/8848914 |url-status=live }}
The GST distribution was expected to become a political issue for the upcoming federal election, which was due to be held in 2019.{{Cite web |last=Grattan |first=Michelle |author-link=Michelle Grattan |date=2018-07-05 |title=Turnbull government says no losers in its new GST carve-up plan |url=http://theconversation.com/turnbull-government-says-no-losers-in-its-new-gst-carve-up-plan-99415 |url-status=live |archive-url=https://web.archive.org/web/20210302045459/https://theconversation.com/turnbull-government-says-no-losers-in-its-new-gst-carve-up-plan-99415 |archive-date=2 March 2021 |access-date=2022-01-24 |website=The Conversation |language=en |issn=2201-5639}}
A review of the HFE system by the Productivity Commission was requested by Morrison in April 2017.{{Cite web|last=Hutchens|first=Gareth|date=30 April 2017|title=Scott Morrison orders review of GST distribution|url=http://www.theguardian.com/australia-news/2017/apr/30/scott-morrison-orders-review-of-gst-distribution|url-status=live|archive-url=https://web.archive.org/web/20201111190521/https://www.theguardian.com/australia-news/2017/apr/30/scott-morrison-orders-review-of-gst-distribution|archive-date=11 November 2020|access-date=9 October 2021|website=The Guardian|language=en}} A draft copy of the report was released in October, recommending that WA's share rise by $3.2–3.6 billion at the expense of all other state and territory shares.{{Cite web|last=Hutchens|first=Gareth|date=9 October 2017|title=GST distribution: WA could gain billions in revenue at expense of eastern states|url=http://www.theguardian.com/australia-news/2017/oct/09/gst-distribution-wa-could-gain-billions-in-revenue-at-expense-of-eastern-states|url-status=live|archive-url=https://web.archive.org/web/20201112013525/https://www.theguardian.com/australia-news/2017/oct/09/gst-distribution-wa-could-gain-billions-in-revenue-at-expense-of-eastern-states|archive-date=12 November 2020|access-date=9 October 2021|website=The Guardian|language=en}} This provoked a vigorous reaction from South Australian (SA) Premier Steven Marshall (Liberal), who said the state would not support any change that would reduce SA's share.{{Cite news|last=Langenberg|first=Adam|date=29 March 2018|title=State Government to reject any change to GST share for South Australia|work=news.com.au|publisher=News Corp Australia|url=https://adelaidenow.com.au/news/south-australia/state-government-to-reject-any-change-to-gst-share-for-south-australia/news-story/d0b3c5b036a51ab40525063cd8425283|access-date=9 October 2021|archive-date=3 April 2018|archive-url=https://web.archive.org/web/20180403193419/http://www.adelaidenow.com.au/news/south-australia/state-government-to-reject-any-change-to-gst-share-for-south-australia/news-story/d0b3c5b036a51ab40525063cd8425283|url-status=live}}
Morrison directed the Productivity Commission to undertake a second review of the HFE system in May 2017.{{Cite report |url=https://www.pc.gov.au/inquiries/completed/horizontal-fiscal-equalisation/report/horizontal-fiscal-equalisation.pdf |title=Horizontal Fiscal Equalisation |date=15 May 2018 |publisher=Productivity Commission |issue=88 |location=Canberra |pages=iv–v |isbn=9781740376587 |issn=1447-1337 |access-date=9 October 2021 |archive-url=https://web.archive.org/web/20210910083149/https://www.pc.gov.au/inquiries/completed/horizontal-fiscal-equalisation/report/horizontal-fiscal-equalisation.pdf |archive-date=10 September 2021 |url-status=live}} Victoria made a submission to the Commission opposing any changes to the distribution system.{{Cite web |last=Wright |first=Shane |date=27 December 2017 |title=Victoria to fight WA on GST claim |url=https://www.perthnow.com.au/news/wa/was-bid-for-gst-boost-hit-by-victorian-pledge-ng-b88700311z |url-status=live |archive-url=https://web.archive.org/web/20180909032243/https://www.perthnow.com.au/news/wa/was-bid-for-gst-boost-hit-by-victorian-pledge-ng-b88700311z |archive-date=9 September 2018 |access-date=10 October 2021 |website=PerthNow |publisher=Seven West Media |language=en}} The report was handed down in May 2018, and recommended that the returns should be determined so as to allow for states to provide "a reasonable (rather than the same) standard" of infrastructure and services.{{Cite report |url=https://www.pc.gov.au/inquiries/completed/horizontal-fiscal-equalisation/report/horizontal-fiscal-equalisation.pdf |title=Horizontal Fiscal Equalisation |date=15 May 2018 |publisher=Productivity Commission |issue=88 |location=Canberra |page=236 |isbn=9781740376587 |issn=1447-1337 |access-date=9 October 2021 |archive-url=https://web.archive.org/web/20210910083149/https://www.pc.gov.au/inquiries/completed/horizontal-fiscal-equalisation/report/horizontal-fiscal-equalisation.pdf |archive-date=10 September 2021 |url-status=live}} However, the federal government decided to use the payments made to Victoria and NSW as the benchmark for future payments, offering a series of top-up payments to WA that would not come from the existing GST pool but from federal revenue.{{Cite web|last=Freebairn|first=John|date=6 July 2018|title=Why the government will be sending more GST funding to Western Australia|url=http://theconversation.com/why-the-government-will-be-sending-more-gst-funding-to-western-australia-99439|url-status=live|access-date=9 October 2021|website=The Conversation|language=en|issn=2201-5639|archive-date=19 March 2021|archive-url=https://web.archive.org/web/20210319023557/https://theconversation.com/why-the-government-will-be-sending-more-gst-funding-to-western-australia-99439}}
Introduction of GST floor and new equalisation benchmark
The federal government announced its final model in July 2018. The plan, which began in 2019–20, consisted of a floor of 70 cents per dollar in the financial year 2022–23, rising to 75 cents in the dollar from 2024–25, a guarantee which applies to all states and territories.{{Cite report |url=https://www.cgc.gov.au/sites/default/files/2021-11/occasional_paper_4_-_new_arrangements_-_6-10.pdf |title=New arrangements for distributing GST |date=September 2021 |publisher=Commonwealth Grants Commission |issue=4 |location=Canberra |pages=2 |access-date=10 September 2023 |archive-url=https://web.archive.org/web/20230807123300/https://www.cgc.gov.au/sites/default/files/2021-11/occasional_paper_4_-_new_arrangements_-_6-10.pdf |archive-date=7 August 2023 |url-status=live |journal= |series=Occasional Paper Series}} The federal government would add additional federal funds to the GST pool to smooth the transition through to 2026–27, to make a "no worse-off guarantee" that no state or territory would have its share fall during this time. The WA government called the plan "compensation" for the state's previous low shares, and stated the new formula would ensure its return to a budget surplus.{{Cite web|last1=Perpitch|first1=Nicolas|last2=Laschon|first2=Eliza|date=5 July 2018|title=WA will finally get a GST boost and here's how it's going to work|url=https://www.abc.net.au/news/2018-07-05/gst-changes-explained-how-wa-will-benefit/9943784|url-status=live|access-date=9 October 2021|website=ABC News|publisher=Australian Broadcasting Corporation|language=en-AU|archive-date=10 November 2019|archive-url=https://web.archive.org/web/20191110040619/https://www.abc.net.au/news/2018-07-05/gst-changes-explained-how-wa-will-benefit/9943784}}
Prior to the reforms, the CGC had used the fiscally strongest state as its equalisation benchmark. However, the new changes meant that the each state or territories relativity must be at least as high as the relativity of the standard state (the standard state being the fiscally stronger of Victoria or NSW).{{Cite report |url=https://www.cgc.gov.au/sites/default/files/2021-11/occasional_paper_4_-_new_arrangements_-_6-10.pdf |title=New arrangements for distributing GST |date=September 2021 |publisher=Commonwealth Grants Commission |issue=4 |location=Canberra |pages=1–2 |access-date=2023-08-07 |archive-url=https://web.archive.org/web/20230807123300/https://www.cgc.gov.au/sites/default/files/2021-11/occasional_paper_4_-_new_arrangements_-_6-10.pdf |archive-date=7 August 2023 |url-status=live |series=Occasional Paper Series}}
At the 2019 federal election, the government campaigned on its GST solution in WA, as many of the state's sixteen seats were under threat from the opposition.{{Cite web |last=Tingle |first=Laura |author-link=Laura Tingle |date=2019-05-02 |title=In this election, WA is in play on a scale not seen for some years |url=https://www.abc.net.au/news/2019-05-02/federal-election-2019-western-australia-key-for-liberal-labor/11064150 |url-status=live |archive-url=https://web.archive.org/web/20190914195756/https://www.abc.net.au/news/2019-05-02/federal-election-2019-western-australia-key-for-liberal-labor/11064150 |archive-date=14 September 2019 |access-date=2022-01-24 |website=ABC News |publisher=Australian Broadcasting Corporation |language=en-AU}}
Dissatisfaction with the reform
= During the COVID-19 pandemic =
WA recorded very low levels of infections by both national and international standards during the COVID-19 pandemic, allowing the state to live under only limited restrictions compared to the lockdowns seen in the eastern states. This resulted in little disruption to the state's economy relative to other states and territories. This, combined with substantially increased iron ore royalties (one of the state's main exports that saw a substantial price rise in 2020 and 2021), meant the state recorded the only surplus in the nation: $5.8 billion in the 2020–21 financial year.{{Cite web |last=Kehoe |first=John |date=10 September 2021 |title=WA's GST windfall: 'McGowan is the Gollum of Australian politics' |url=https://www.afr.com/policy/economy/wa-s-gst-windfall-mcgowan-is-the-gollum-of-australian-politics-20210910-p58qj4 |url-access=limited |url-status=live |archive-url=https://web.archive.org/web/20210923105844/https://www.afr.com/policy/economy/wa-s-gst-windfall-mcgowan-is-the-gollum-of-australian-politics-20210910-p58qj4 |archive-date=23 September 2021 |access-date=9 October 2021 |website=Australian Financial Review |publisher=Nine Entertainment Co. |language=en |publication-place=Sydney |issn=1444-9900 |oclc=1131035760}}{{Cite web |last=Hastie |first=Hamish |date=2022-06-27 |title=Iron ore riches, GST to thank as WA's credit rating upgraded to AAA after nine years |url=https://www.watoday.com.au/national/iron-ore-riches-gst-to-thank-as-wa-s-credit-rating-upgraded-to-aaa-after-nine-years-20220627-p5ax00.html |access-date=2022-07-01 |website=WAtoday |publisher=Nine Entertainment Co. |language=en |publication-place=Perth |archive-date=22 August 2022 |archive-url=https://web.archive.org/web/20220822060251/https://www.watoday.com.au/national/iron-ore-riches-gst-to-thank-as-wa-s-credit-rating-upgraded-to-aaa-after-nine-years-20220627-p5ax00.html |url-status=live }}
On 4 August 2021, the Victorian Legislative Assembly established a public inquiry into the state's "share of federal GST funding".{{Cite web |date=4 September 2021 |title=Terms of reference – Inquiry into Commonwealth support for Victoria |url=https://www.parliament.vic.gov.au/images/stories/committees/eic-LA/Inquiry_into_Commonwealth_support_for_Victoria/TOR/Terms_of_reference_-_Inquiry_into_Commonwealth_support_for_Victoria.pdf |url-status=live |archive-url=https://web.archive.org/web/20211010012726/https://www.parliament.vic.gov.au/images/stories/committees/eic-LA/Inquiry_into_Commonwealth_support_for_Victoria/TOR/Terms_of_reference_-_Inquiry_into_Commonwealth_support_for_Victoria.pdf |archive-date=10 October 2021 |access-date=10 October 2021 |website=Parliament of Victoria |publisher=Victorian Legislative Assembly |location=Melbourne }} The governments of Tasmania, the Australian Capital Territory (ACT), and SA all made submissions opposing the new model of distribution, while WA made a submission supporting the reform.{{Cite web |title=Submissions - Inquiry into Commonwealth support for Victoria |url=https://www.parliament.vic.gov.au/eic-la/inquiries/article/4766 |access-date=2022-01-24 |website=Parliament of Victoria |publisher=Victorian Legislative Council |location=Melbourne |archive-date=24 January 2022 |archive-url=https://web.archive.org/web/20220124092327/https://www.parliament.vic.gov.au/eic-la/inquiries/article/4766 |url-status=live }} The inquiry tabled its report on 10 March 2022, concluding that WA was being unfairly advantaged over the other states and territories, and called for a return to the original HFE system without a payments floor.{{Cite book |date=2022-03-10 |title=Inquiry into Commonwealth support for Victoria |url=https://www.parliament.vic.gov.au/images/stories/committees/eic-LA/Inquiry_into_Commonwealth_support_for_Victoria/Final_report/LA_59-03_Commonwealth_support_for_Victoria.pdf |access-date=2022-04-19 |publisher=Victorian Legislative Council |location=Melbourne |isbn=9781922425676 |archive-date=13 March 2022 |archive-url=https://web.archive.org/web/20220313052729/https://www.parliament.vic.gov.au/images/stories/committees/eic-LA/Inquiry_into_Commonwealth_support_for_Victoria/Final_report/LA_59-03_Commonwealth_support_for_Victoria.pdf |url-status=live }}
NSW treasurer Dominic Perrottet (Liberal) called McGowan the "Gollum of Australian politics" and demanded a review of the GST floor.{{Cite web |last=Wright |first=Shane |date=5 October 2021 |title=No deal: Perrottet plea for GST change rebuffed |url=https://www.smh.com.au/politics/federal/no-deal-perrottet-plea-for-gst-change-rebuffed-20211005-p58xe5.html |url-status=live |archive-url=https://web.archive.org/web/20211016163620/https://www.smh.com.au/politics/federal/no-deal-perrottet-plea-for-gst-change-rebuffed-20211005-p58xe5.html |archive-date=16 October 2021 |access-date=20 October 2021 |website=The Sydney Morning Herald |publisher=Nine Entertainment Co. |location=Sydney |language=en |issn=0312-6315 |oclc=226369741}} Victorian treasurer Tim Pallas (Labor) claimed the GST formula was being "manipulated" in WA's favour at the expense of the other states, and suggested the federal parties' support for the reform was intended to win support in Western Australia for the 2022 federal election.{{Cite web |last=Gordon |first=Josh |date=2021-12-18 |editor-last=Alcorn |editor-first=Gay |editor-link=Gay Alcorn |title=Victoria furious over GST transfer to WA |url=https://www.theage.com.au/politics/victoria/victoria-furious-over-gst-transfer-to-wa-20211218-p59ink.html |url-status=live |archive-url=https://web.archive.org/web/20220124092324/https://www.theage.com.au/politics/victoria/victoria-furious-over-gst-transfer-to-wa-20211218-p59ink.html |archive-date=24 January 2022 |access-date=2022-01-24 |website=The Age |publisher=Nine Entertainment Co. |language=en |issn=0312-6307 |location=Melbourne}}
Perrottet became NSW Premier in October and said his government would pursue a new GST distribution scheme.{{Cite news|last=Nilsson|first=Anton|date=6 October 2021|title='Danger': Premier calls for backup|work=news.com.au|publisher=News Corp Australia|url=https://www.news.com.au/finance/money/nsw-premier-dominic-perrottet-says-new-treasurer-will-continue-gst-battle-with-wa/news-story/a0d4ca3da15ff7a40181257fe54ea6ad|access-date=9 October 2021|archive-date=7 October 2021|archive-url=https://web.archive.org/web/20211007202324/https://www.news.com.au/finance/money/nsw-premier-dominic-perrottet-says-new-treasurer-will-continue-gst-battle-with-wa/news-story/a0d4ca3da15ff7a40181257fe54ea6ad|url-status=live}} However, Morrison (who became leader of the federal Liberals and Prime Minister in August 2018) and opposition leader Anthony Albanese (Labor) both said they would not consider changing the formula implemented in 2018.{{Cite news|last=Lewins|first=Dean|date=5 October 2021|title='Stop whingeing': Mark McGowan scolds Dominic Perrottet over GST stoush|language=en-AU|work=ABC News|publisher=Australian Broadcasting Corporation|url=https://www.abc.net.au/news/2021-10-05/wa-battlelines-drawn-over-gst-share-as-new-nsw-premier-elected/100515788|access-date=9 October 2021|archive-date=8 October 2021|archive-url=https://web.archive.org/web/20211008160139/https://www.abc.net.au/news/2021-10-05/wa-battlelines-drawn-over-gst-share-as-new-nsw-premier-elected/100515788|url-status=live}} McGowan drew some media attention after joking he would take a spear to meetings with Perrottet during a press conference in which he dismissed the NSW complaint.{{Cite web|last=Zaczek|first=Zoe|date=8 October 2021|title=WA Premier poses with spear, asks Perrottet to 'take me on' amid GST row|url=https://www.skynews.com.au/australia-news/politics/mark-mcgowan-poses-with-spear-during-bizarre-media-briefing-asks-wheres-dom-perrottet-when-i-need-him-amid-gst-row/news-story/5446da5164b022acfd11a0740a8207a1|url-status=live|access-date=11 October 2021|website=Sky News Australia|publisher=News Corp Australia|language=en|archive-date=8 October 2021|archive-url=https://web.archive.org/web/20211008145516/https://www.skynews.com.au/australia-news/politics/mark-mcgowan-poses-with-spear-during-bizarre-media-briefing-asks-wheres-dom-perrottet-when-i-need-him-amid-gst-row/news-story/5446da5164b022acfd11a0740a8207a1}}{{Cite web |last=Elton |first=Charlotte |date=7 October 2021 |title=McGowan's spear-wielding challenge to new NSW Premier |url=https://thewest.com.au/news/coronavirus/premier-mark-mcgowan-calls-on-nsw-premier-dom-perrottet-to-take-him-on-amid-covid-mandate-announcement-ng-b882031828z |url-access=subscription |url-status=live |archive-url=https://web.archive.org/web/20211010192429/https://thewest.com.au/news/coronavirus/premier-mark-mcgowan-calls-on-nsw-premier-dom-perrottet-to-take-him-on-amid-covid-mandate-announcement-ng-b882031828z |archive-date=10 October 2021 |access-date=11 October 2021 |website=The West Australian |publisher=Seven West Media |location=Perth |language=en |issn=0312-6323}}
SA also announced an inquiry into the distribution formula, which gained the support of the Victorian and Tasmanian state governments.{{Cite news |last=Law |first=Peter |date=2021-10-29 |title=New fight on the GST |page=9 |work=The West Australian |publisher=Seven West Media |publication-place=Perth |editor-last=De Ceglie |editor-first=Anthony |editor-link=Anthony De Ceglie |url=https://thewest.com.au/business/gst/south-australian-led-review-to-turn-up-heat-on-was-gst-gains-ng-b882056089z |url-status=live |access-date=2021-11-01 |archive-url=https://web.archive.org/web/20211029043140/https://thewest.com.au/business/gst/south-australian-led-review-to-turn-up-heat-on-was-gst-gains-ng-b882056089z |archive-date=29 October 2021 |issn=0312-6323}} SA treasurer Rob Lucas (Liberal) said the state government wanted the no worse-off guarantee to be permanent and the Productivity Commission inquiry scheduled for 2027 to be brought forward.{{Cite web |last=Polychronis |first=Gabriel |date=2021-07-28 |title=Treasurer Rob Lucas tells Budget Estimates Committee he will launch independent review into Australia's GST system |url=https://www.adelaidenow.com.au/news/south-australia/treasurer-rob-lucas-tells-budget-estimates-committee-he-will-launch-independent-review-into-australias-gst-system/news-story/36e7b6b99200478b5a694b16d6b20bc5 |url-access=subscription |url-status=live |archive-url=https://archive.today/20220124091114/https://amp.adelaidenow.com.au/news/south-australia/treasurer-rob-lucas-tells-budget-estimates-committee-he-will-launch-independent-review-into-australias-gst-system/news-story/36e7b6b99200478b5a694b16d6b20bc5 |archive-date=24 January 2022 |access-date=2022-01-24 |website=The Advertiser |publisher=News Corp Australia |location=Adelaide }}
= After the 2022 federal election =
Ahead of the 2022 federal election, the CGC produced a report which concluded all states except WA would receive less under the new system than the old once the no worse-off guarantee expires in 2027. Pallas claimed the new distribution system "has nothing to do with making the GST fairer and everything to do with winning the west at the election."{{Cite web |last1=Wright |first1=Shane |last2=Gordon |first2=Josh |date=2022-03-25 |title=Victoria furious Canberra's GST carve-up 'robs' the state of billions |url=https://www.theage.com.au/politics/victoria/victoria-furious-canberra-s-gst-carve-up-robs-the-state-of-billions-20220325-p5a81x.html |access-date=2022-04-24 |website=The Age |publisher=Nine Entertainment Co. |location=Melbourne |language=en |issn=0312-6307 |archive-date=18 April 2022 |archive-url=https://web.archive.org/web/20220418050510/https://www.theage.com.au/politics/victoria/victoria-furious-canberra-s-gst-carve-up-robs-the-state-of-billions-20220325-p5a81x.html |url-status=live }} New SA Premier Peter Malinauskas (Labor) also joined the criticism. At the federal level, both parties committed to maintaining the new system.{{Cite news |last=Bourke |first=Keanne |date=2022-04-04 |title=With WA's budget surplus surging, its GST share is also skyrocketing as the federal election looms |language=en-AU |work=ABC News |publisher=Australian Broadcasting Corporation |url=https://www.abc.net.au/news/2022-04-05/wa-gst-deal-wins-bipartisan-support-despite-huge-budget-surplus/100963784 |access-date=2022-04-24 |archive-date=19 April 2022 |archive-url=https://web.archive.org/web/20220419180742/https://www.abc.net.au/news/2022-04-05/wa-gst-deal-wins-bipartisan-support-despite-huge-budget-surplus/100963784 |url-status=live }} Labor won the 2022 election, and Prime Minister Albanese and treasurer Jim Chalmers subsequently committed multiple times to maintaining the GST reform.{{Cite news |last=Curtis |first=Katina |date=2023-04-11 |title=Billions of reasons WA can't be taken for granted |pages=4 |work=The West Australian |publisher=Seven West Media |publication-place=Perth |editor-last=De Ceglie |editor-first=Anthony |editor-link=Anthony De Ceglie |url=https://thewest.com.au/politics/federal-politics/shadow-treasurer-angus-taylor-brings-his-budget-message-to-wa-c-10302217 |url-status=live |url-access=subscription |access-date=2023-04-14 |archive-url=https://archive.today/20230414083613/https://thewest.com.au/politics/federal-politics/shadow-treasurer-angus-taylor-brings-his-budget-message-to-wa-c-10302217 |archive-date=2023-04-14 |issn=0312-6323}}{{Cite news |last=McLeod |first=Catie |date=2023-03-14 |title=Treasurer vows no changes to controversial Morrison-era GST deal |language=en-AU |work=The Australian |publisher=News Corp Australia |agency=NCA NewsWire |url=https://www.theaustralian.com.au/breaking-news/treasurer-vows-no-changes-to-controversial-deal-costing/news-story/75e7eca65280dca96a117c9c67a78ee6 |url-status=live |access-date=2023-09-16 |archive-url=https://archive.today/20230916091128/https://www.theaustralian.com.au/breaking-news/treasurer-vows-no-changes-to-controversial-deal-costing/news-story/75e7eca65280dca96a117c9c67a78ee6?amp&nk=f29d27ac0aec85741e7ca9b751835276-1694855493 |archive-date=2023-09-16 |issn=1038-8761}}
In November 2022, McGowan announced the creation of a state wealth fund backed by WA's mining sector, a policy that drew criticism from shadow treasurer Steve Thomas (Liberal) who believed it would justify demands to overturn the GST reform.{{Cite web |last=Zimmerman |first=Josh |date=2022-11-22 |title=New mining sector investment fund a risk for WA as eastern states urge wind back of 2018 GST deal |url=https://thewest.com.au/politics/new-mining-sector-investment-fund-a-risk-for-wa-as-eastern-states-urge-wind-back-of-2018-gst-deal--c-8933225 |access-date=2022-12-13 |website=The West Australian |publisher=Seven West Media |place=Perth |language=en |issn=0312-6323 |archive-date=13 December 2022 |archive-url=https://web.archive.org/web/20221213042034/https://thewest.com.au/politics/new-mining-sector-investment-fund-a-risk-for-wa-as-eastern-states-urge-wind-back-of-2018-gst-deal--c-8933225 |url-status=live }}
In December 2022, prior to the 2023 NSW state election, Perrottet again criticised the GST arrangement, again suggesting a review of the distribution. McGowan responded by stating that WA received less than it contributed while NSW received more than it contributed, saying "how that is unfair on NSW is a mystery to anyone with a brain".{{Cite web |last=Davis |first=Miriah |date=2022-12-12 |title=Mark McGowan lashes Dominic Perrottet amid ongoing GST battle |url=https://www.skynews.com.au/australia-news/wa-premier-mark-mcgowan-labels-new-south-wales-government-an-utter-basket-case-as-gst-carve-up-feud-reignites/news-story/0378d4009a06ca90198118a15f8ab1c4 |access-date=2022-12-13 |website=Sky News Australia |publisher=News Corp Australia |language=en |archive-date=13 December 2022 |archive-url=https://web.archive.org/web/20221213042036/https://www.skynews.com.au/australia-news/wa-premier-mark-mcgowan-labels-new-south-wales-government-an-utter-basket-case-as-gst-carve-up-feud-reignites/news-story/0378d4009a06ca90198118a15f8ab1c4 |url-status=live }}{{Cite web |last=Raphael |first=Angie |date=2022-12-11 |title='Basket case': WA Premier Mark McGowan rips into NSW government |url=https://www.news.com.au/national/nsw-act/politics/basket-case-wa-premier-mark-mcgowan-rips-into-nsw-government/news-story/7fcb7eab7c66f8d092e75131a547aa91 |url-status=live |archive-url=https://web.archive.org/web/20221213052116/https://www.news.com.au/national/nsw-act/politics/basket-case-wa-premier-mark-mcgowan-rips-into-nsw-government/news-story/7fcb7eab7c66f8d092e75131a547aa91 |archive-date=13 December 2022 |access-date=2022-12-13 |website=news.com.au |publisher=News Corp Australia |agency=NCA NewsWire}} In the 2022–23 financial year, WA received a return of 70.000 cents per dollar collected (at the GST floor), whereas NSW received 95.065 cents per dollar of GST collected in that state.{{Cite report |url=https://www.cgc.gov.au/sites/default/files/2022-03/2022%20Update%20of%20GST%20revenue%20sharing%20relativities%20%281%29.pdf |title=GST Revenue Sharing Relativities, 2022 Update |date=25 March 2022 |publisher=Commonwealth Grants Commission |location=Canberra |page=4 |isbn=9780648591238 |access-date=14 April 2023 |archive-url=https://web.archive.org/web/20230415064306/https://www.cgc.gov.au/sites/default/files/2022-03/2022%20Update%20of%20GST%20revenue%20sharing%20relativities%20(1).pdf |archive-date=15 April 2023 |url-status=live}} NSW opposition leader Chris Minns (Labor) said that the state should prioritise its own budget repair before attacking the GST reform.{{Cite web |last=Hastie |first=Hamish |date=2022-12-20 |title='Fact-finding mission': Minns and McGowan friendly on GST |url=https://www.smh.com.au/national/fact-finding-mission-minns-and-mcgowan-friendly-on-gst-20221220-p5c7sw.html |url-access=limited |access-date=2023-04-30 |website=The Sydney Morning Herald |publisher=Nine Entertainment |language=en |issn=0312-6315 |oclc=226369741 |archive-date=3 May 2023 |archive-url=https://web.archive.org/web/20230503120550/https://www.smh.com.au/national/fact-finding-mission-minns-and-mcgowan-friendly-on-gst-20221220-p5c7sw.html |url-status=live }} However, in March 2023, Minns (who eventually won the state election and became premier) criticised the reform and stated NSW was entitled to a larger share.{{Cite web |last=Zimmerman |first=Josh |date=2023-03-21 |editor-last=De Ceglie |editor-first=Anthony |editor-link=Anthony De Ceglie |title=Now even Labor in NSW is joining GST grab |url=https://thewest.com.au/politics/state-politics/chris-minns-claims-nsw-entitled-to-bigger-share-of-gst-signaling-showdown-with-mark-mcgowan-and-pm-c-10094092 |url-status=live |archive-url=https://web.archive.org/web/20230503222050/https://thewest.com.au/politics/state-politics/chris-minns-claims-nsw-entitled-to-bigger-share-of-gst-signaling-showdown-with-mark-mcgowan-and-pm-c-10094092 |archive-date=3 May 2023 |access-date=2023-04-30 |website=The West Australian |publisher=Seven West Media |place=Perth |page=9 |language=en-AU |issn=0312-6323}} The NSW government hired a bureaucrat to lead a team of public servants to advance the state's interests in "federal financial relations".{{Cite web |last1=Spagnolo |first1=Joe |last2=Curtis |first2=Katina |date=2023-03-04 |editor-last=De Ceglie |editor-first=Anthony |editor-link=Anthony De Ceglie |title=NSW's hired GST gun to target WA |url=https://thewest.com.au/business/gst/premier-mark-mcgowan-rubbishes-nsws-plan-to-get-its-hands-on-more-of-was-gst-dollars--c-9936362 |url-access=subscription |url-status=live |archive-url=https://archive.today/20230408104539/https://thewest.com.au/business/gst/premier-mark-mcgowan-rubbishes-nsws-plan-to-get-its-hands-on-more-of-was-gst-dollars--c-9936362 |archive-date=2023-04-08 |access-date=2023-04-30 |website=The Sunday Times |publisher=Seven West Media |page=2 |language=en-AU |issn=1442-9527 |oclc=427972890}}
In April 2023, ahead of the federal budget, federal shadow treasurer Angus Taylor (Liberal) warned the government not to use increased mining royalties to justify reducing WA's share of the GST. The same month, the Grattan Institute released a report on federal budget repair that included a recommendation to reverse the GST reform.{{Cite news |last=Jervis-Bardy |first=Dan |date=2023-04-12 |title=Think tank calls for scrapping of WA's GST deal to help repair Budget |language=en |pages=1, 4 |website=The West Australian |publisher=Seven West Media |place=Perth |editor-last=De Ceglie |editor-first=Anthony |editor-link=Anthony De Ceglie |url=https://thewest.com.au/news/wa/abolish-wa-gst-deal-to-help-repair-battered-federal-budget-major-report-c-10313997 |url-status=live |url-access=subscription |access-date=2023-04-12 |archive-url=https://web.archive.org/web/20230416200228/https://thewest.com.au/news/wa/abolish-wa-gst-deal-to-help-repair-battered-federal-budget-major-report-c-10313997 |archive-date=16 April 2023 |issn=0312-6323}}{{Cite news |last=Karp |first=Paul |date=2023-04-11 |title=Redesigned stage-three tax cuts among options that could halve $50bn budget deficit, report says |language=en-GB |work=The Guardian |url=https://www.theguardian.com/australia-news/2023/apr/12/redesigned-stage-three-3-tax-cuts-among-options-that-could-halve-50bn-budget-deficit-report-says |url-status=live |access-date=2023-04-12 |issn=0261-3077 |archive-date=9 May 2023 |archive-url=https://web.archive.org/web/20230509040720/https://www.theguardian.com/australia-news/2023/apr/12/redesigned-stage-three-3-tax-cuts-among-options-that-could-halve-50bn-budget-deficit-report-says }} Following the report Zoe Daniel, a Victorian teal independent, backed the Grattan Institute's report and argued that the WA deal was unjustified and should be rolled back entirely, due to the deficits faced in the federal and state and territory budgets.{{Cite news |last=Snowden |first=Angelica |date=2023-04-14 |title=Teal urges PM to axe 'unjustified' GST deal |work=The Australian |publisher=News Corp Australia |url=https://www.theaustralian.com.au/nation/victorian-teal-says-prime-minister-should-scrap-wa-gst-deal-as-state-and-federal-budgets-loom/news-story/6af4abb4a6f774963af3cf4892cf2348 |url-status=live |url-access=subscription |access-date=2023-04-14 |archive-url=https://archive.today/20230414044741/https://www.theaustralian.com.au/nation/victorian-teal-says-prime-minister-should-scrap-wa-gst-deal-as-state-and-federal-budgets-loom/news-story/6af4abb4a6f774963af3cf4892cf2348?amp&nk=cf0512ddbea443192159cc0db64c945f-1681447667 |archive-date=2023-04-14 |issn=1038-8761}} Kate Chaney, a teal from WA, responded to Daniel saying that the GST reform should not be altered and that WA should not be expected to compensate for fiscal mismanagement by other states. Further, Chaney argued that revenue from gambling taxes (a major source of revenue for the eastern states where slot machines are commonplace) should be included when calculating GST shares, as mineral royalties are.{{Cite news |last1=Curtis |first1=Katina |last2=Dietsch |first2=Jake |date=2023-04-14 |title=Kate Chaney tells fellow teal independent hands off GST deal |work=The West Australian |publisher=Seven West Media |location=Perth |url=https://thewest.com.au/politics/kate-chaney-tells-fellow-teal-independent-hands-off-gst-deal-c-10342211 |url-status=live |url-access=subscription |access-date=2023-04-14 |archive-url=https://archive.today/20230414081604/https://thewest.com.au/politics/kate-chaney-tells-fellow-teal-independent-hands-off-gst-deal-c-10342211 |archive-date=2023-04-14 |issn=0312-6323}} The McGowan government allocated $1.6 million to fund a dedicated team of eight staff within the Department of Treasury to advance the state's case to preserve the reform in time for the CGC's methodology review.{{Cite web |last=Spagnolo |first=Joe |date=2023-04-30 |title=New GST 'fighters' to rock whingers |url=https://thewest.com.au/news/wa/mark-mcgowan-calls-in-gst-fairness-fighters-to-make-sure-wa-is-not-dudded-on-billions--c-10484676 |url-access=subscription |url-status=live |archive-url=https://archive.today/20230430092859/https://thewest.com.au/news/wa/mark-mcgowan-calls-in-gst-fairness-fighters-to-make-sure-wa-is-not-dudded-on-billions--c-10484676 |archive-date=2023-04-30 |access-date=2023-04-30 |website=The Sunday Times |publisher=Seven West Media |page=5 |language=en |issn=1442-9527 |oclc=427972890}} Tasmanian treasurer Michael Ferguson (Liberal) said that funding a dedicated team proved that the reforms were unfair, while WA opposition leader Shane Love (Nationals) said they were wasted since the final decision would be political, not mathematical.{{Cite web |last=Brookes |first=Sarah |date=2023-07-09 |title=WA's huge 'GST fairness fighters squad' is proof GST is unfair: Tasmania |url=https://www.watoday.com.au/national/western-australia/wa-circles-the-wagons-as-eastern-states-lament-unfair-gst-deal-20230706-p5dm8b.html |url-access=limited |url-status=live |archive-url=https://web.archive.org/web/20230724005624/https://www.watoday.com.au/national/western-australia/wa-circles-the-wagons-as-eastern-states-lament-unfair-gst-deal-20230706-p5dm8b.html |archive-date=24 July 2023 |access-date=2023-07-21 |website=WAtoday |publisher=Nine Entertainment Co. |language=en |publication-place=Perth}}
WA projected a surplus of $4.2 billion when it delivered the 2022–23 budget, larger than the surplus forecasted by the federal government. WA forecast a further four years of budget surpluses.{{Cite news |last=Carmody |first=James |date=2023-05-11 |title=WA Budget 2023: Mark McGowan's third budget delivers another massive surplus for WA |language=en-AU |work=ABC News |publisher=Australian Broadcasting Corporation |url=https://www.abc.net.au/news/2023-05-11/wa-budget-2023-mark-mcgowan-third-budget-treasurer/102328216 |access-date=2023-05-15 |archive-date=14 May 2023 |archive-url=https://web.archive.org/web/20230514145337/https://www.abc.net.au/news/2023-05-11/wa-budget-2023-mark-mcgowan-third-budget-treasurer/102328216 |url-status=live }} During his budget speech, McGowan said any changes to the reform that reduced the minimum return would be "contemptible and offensive".{{Cite web |last=Wu |first=Crystal |date=2023-05-11 |title=Western Australia hands down sixth budget surplus |url=https://www.skynews.com.au/australia-news/wa-premier-mark-mcgowan-issues-stern-warning-to-eastern-states-on-gst-as-he-hands-down-42-billion-budget-surplus/news-story/a98bf6f9e37d0ef2f37efb28d6f4f324 |access-date=2023-05-15 |website=Sky News Australia |publisher=News Corp Australia |language=en |archive-date=12 May 2023 |archive-url=https://web.archive.org/web/20230512065821/https://www.skynews.com.au/australia-news/wa-premier-mark-mcgowan-issues-stern-warning-to-eastern-states-on-gst-as-he-hands-down-42-billion-budget-surplus/news-story/a98bf6f9e37d0ef2f37efb28d6f4f324 |url-status=live }} The 70 cents per dollar return remained the lowest return awarded to any state or territory. The surplus (which was WA's sixth in a row) and projections of future surpluses prompted speculation that the federal government would be pressured into reneging on the reforms. McGowan said he believed it would be politically impossible for either major party to roll back the reforms given the severe electoral consequences they would suffer in WA. He again criticised other states and territories for demanding changes, pointing out that the no worse-off guarantee meant other jurisdictions would be in the same financial positions had the reforms never occurred.{{Cite web |last=Hastie |first=Hamish |date=2023-05-12 |title='Don't cross this red line': WA's warning to the rest of Australia over GST carve-up |url=https://www.watoday.com.au/politics/western-australia/don-t-cross-this-red-line-wa-s-warning-to-the-rest-of-australia-over-gst-carve-up-20230512-p5d7yy.html |url-access=limited |access-date=2023-05-15 |website=WAtoday |publisher=Nine Entertainment Co. |place=Perth |language=en |archive-date=12 May 2023 |archive-url=https://web.archive.org/web/20230512202753/http://www.watoday.com.au/politics/western-australia/don-t-cross-this-red-line-wa-s-warning-to-the-rest-of-australia-over-gst-carve-up-20230512-p5d7yy.html |url-status=live }}
McGowan announced his retirement in May 2023, prompting Minns, Malinauskas, Andrews, and ACT Chief Minister Andrew Barr (Labor) to all call for the federal government to undo the reforms, or failing that to continue paying the no-worse off guarantee indefinitely.{{Cite web |last1=Curtis |first1=Katina |last2=Jervis-Bardy |first2=Dan |date=2023-05-30 |title=Mark McGowan's shock exit prompts NSW to launch fresh assault on WA GST deal |url=https://thewest.com.au/politics/federal-politics/mark-mcgowans-shock-exit-prompts-nsw-to-launch-fresh-assault-on-wa-gst-deal-c-10814853 |url-access=subscription |url-status=live |archive-url=https://archive.today/20230604090208/https://thewest.com.au/politics/federal-politics/mark-mcgowans-shock-exit-prompts-nsw-to-launch-fresh-assault-on-wa-gst-deal-c-10814853 |archive-date=2023-06-04 |access-date=2023-06-04 |website=The West Australian |publisher=Seven West Media |place=Perth |language=en-AU |issn=0312-6323}} SA treasurer Stephen Mullighan (Labor) called the reform "the greatest act of vandalism" in the federation's history.{{Cite news |last=Penberthy |first=David |author-link=David Penberthy |date=2023-06-05 |title=SA Treasurer takes on WA in GST stoush |work=The Australian |publisher=News Corp Australia |url=https://www.theaustralian.com.au/nation/sa-treasurer-takes-on-wa-in-gst-stoush/news-story/a6fafdff2c2411c02174a561825a5c49 |url-status=live |url-access=subscription |access-date=2023-06-06 |archive-url=https://archive.today/20230606120330/https://www.theaustralian.com.au/nation/sa-treasurer-takes-on-wa-in-gst-stoush/news-story/a6fafdff2c2411c02174a561825a5c49?amp&nk=5afc06a6e2ed17478792226b5b2de0c4-1686053017 |archive-date=2023-06-06 |issn=1038-8761}} McGowan's successor Roger Cook (Labor) echoed McGowan's previous comments, stating states could not use the reform as an excuse for running deficits.{{Cite news |last=Garvey |first=Paul |date=2023-06-06 |title=New leader, same old fight over GST carve-up |work=The Australian |publisher=News Corp Australia |url=https://www.theaustralian.com.au/nation/new-leader-same-old-fight-over-gst-carveup/news-story/a49c302237bbcbb84a9ffdc45a0e8d87 |url-status=live |url-access=subscription |access-date=2023-06-06 |archive-url=https://archive.today/20230606120029/https://www.theaustralian.com.au/nation/new-leader-same-old-fight-over-gst-carveup/news-story/a49c302237bbcbb84a9ffdc45a0e8d87?amp&nk=7def72866b848d70ec382a432ca18bb4-1686052834 |archive-date=2023-06-06 |issn=1038-8761}}
The 2023–24 Queensland budget projected a surplus of $12.3 billion as a result of increased coal revenues, the largest surplus ever recorded for a state or territory government.{{Cite web |last=Dennien |first=Matt |date=2023-06-13 |title=Record $12b surplus as Qld rides property and coal boom |url=https://www.brisbanetimes.com.au/politics/queensland/record-12b-surplus-as-qld-rides-property-and-coal-boom-20230613-p5dg34.html |access-date=2023-06-19 |website=Brisbane Times |publisher=Nine Entertainment Co. |language=en |archive-date=17 June 2023 |archive-url=https://web.archive.org/web/20230617225646/https://www.brisbanetimes.com.au/politics/queensland/record-12b-surplus-as-qld-rides-property-and-coal-boom-20230613-p5dg34.html |url-status=live }} Treasurer Cameron Dick (Labor) said that the state was expected to hit the return floor of 70 cents in the dollar in 2024, and said that the floor gave the government "confidence, knowing that when we do get a big uplift, because of either price change or policy change, we won’t be penalised for that."{{Cite news |last=Lynch |first=Lydia |date=2023-06-11 |title=Mining boom no barrier to Queensland GST grab |work=The Australian |publisher=News Corp Australia |url=https://www.theaustralian.com.au/nation/politics/mining-boom-no-barrier-to-queensland-gst-grab/news-story/add92b81ca35c47431cc55f5c63e89a4?amp&nk=168119d1e03645567152288256b61988-1686498942 |url-status=live |url-access=subscription |access-date=2023-06-19 |archive-url=https://archive.today/20230611155534/https://www.theaustralian.com.au/nation/politics/mining-boom-no-barrier-to-queensland-gst-grab/news-story/add92b81ca35c47431cc55f5c63e89a4?amp&nk=168119d1e03645567152288256b61988-1686498942 |archive-date=2023-06-11 |issn=1038-8761}} Dick said that he expected National Cabinet to discuss extending the no worse-off guarantee beyond 2026–27: Dick said he would support an extension, and refused to criticise the returns floor.
In June 2023, Chalmers's office denied a freedom of information request from Senator Smith who requested access to all correspondence between the federal treasurer and the treasurers of the other states and territories regarding the GST.{{Cite web |last=Spagnolo |first=Joe |date=2023-07-16 |editor-last=De Ceglie |editor-first=Anthony |editor-link=Anthony De Ceglie |title=WA Liberal Senator Dean Smith accuses Albanese Government of GST cover-up |url=https://thewest.com.au/news/wa/chalmers-needs-to-release-gst-correspondence-with-eastern-states-whingers-senator-dean-smith--c-11280686 |url-access=subscription |url-status=live |archive-url=https://archive.today/20230721145119/https://thewest.com.au/news/wa/chalmers-needs-to-release-gst-correspondence-with-eastern-states-whingers-senator-dean-smith--c-11280686 |archive-date=2023-07-21 |access-date=2023-07-21 |website=The West Australian |publisher=Seven West Media |place=Perth |page=5 |language=en |issn=0312-6323}} Chalmers's office confirmed that they held approximately 500 pages of relevant material, but would not fulfill the request due to limited staffing capacity and the likelihood of the request unreasonably interfering with the treasurer's work.
On the eve of his government's first budget in September 2023, NSW treasurer Daniel Mookhey (Labor) revealed that his budget forecasts would work on the assumption that the no-worse off guarantee would be extended indefinitely. NSW was expected to receive approximately $3.8 billion from the federal government over 2023–24 and 2024–24.{{Cite news |last=Demetriadi |first=Alexi |date=2023-09-15 |title=Keep promise on GST, says NSW Treasurer Daniel Mookhey |work=The Australian |publisher=News Corp Australia |url=https://www.theaustralian.com.au/nation/politics/keep-promise-on-gst-says-nsw-treasurer-daniel-mookhey/news-story/d90109ec98fc2fc2b7995939a7ff121d |url-status=live |url-access=subscription |access-date=2023-06-19 |archive-url=https://archive.today/20230915152518/https://www.theaustralian.com.au/nation/politics/keep-promise-on-gst-says-nsw-treasurer-daniel-mookhey/news-story/d90109ec98fc2fc2b7995939a7ff121d?amp&nk=6c9d8dc5a7eec84010cfbf2b6d390cfd-1694791532 |archive-date=2023-09-15 |issn=1038-8761}}{{Cite news |last=Caporn |first=Dylan |date=2023-09-15 |title=NSW Treasurer Daniel Mookey sides with WA to maintain 'fair share' GST deal |url=https://thewest.com.au/news/wa/nsw-treasurer-daniel-mookey-sides-with-wa-to-maintain-fair-share-gst-deal-c-11916761 |url-access=subscription |url-status=live |archive-url=https://archive.today/20230915153748/https://thewest.com.au/news/wa/nsw-treasurer-daniel-mookey-sides-with-wa-to-maintain-fair-share-gst-deal-c-11916761 |archive-date=2023-09-15 |access-date=2023-09-16 |work=The West Australian |issn=0312-6323}}
= Extension of top-up payments =
In December 2023, National Cabinet met and struck an agreement that included extending top-up payments through to 2029–30 in exchange for a new funding arrangement for the National Disability Insurance Scheme.{{Cite web |last=Jervis-Bardy |first=Dan |date=2023-12-06 |editor-last=De Ceglie |editor-first=Anthony |editor-link=Anthony De Ceglie |title=Treasurer Jim Chalmers assures WA its GST deal has remained untouched |url=https://thewest.com.au/politics/treasurer-jim-chalmers-assures-wa-their-gst-deal-has-remained-untouched-c-12801183 |url-access=subscription |url-status=live |archive-url=https://archive.today/20231206045921/https://thewest.com.au/politics/treasurer-jim-chalmers-assures-wa-their-gst-deal-has-remained-untouched-c-12801183 |archive-date=2023-12-06 |access-date=2024-02-13 |website=The West Australian |publisher=Seven West Media |place=Perth |language=en-AU |issn=0312-6323}} In February 2024, economists Saul Eslake and Chris Richardson suggested that the reform could cost the federal government over $50 billion by 2030, and asked the Productivity Commission to recommend abolishing the top-up payment.{{Cite web |last1=Coorey |first1=Phillip |author-link1=Phil Coorey |last2=McIlroy |first2=Tom |date=2024-02-12 |title='Beyond comprehension': WA's GST deal to blow out to $50b |url=https://www.afr.com/politics/federal/beyond-comprehension-wa-s-gst-deal-to-blow-out-to-50b-20240212-p5f49h |url-access=subscription |url-status=live |archive-url=https://archive.today/20240212114449/https://www.afr.com/politics/federal/beyond-comprehension-wa-s-gst-deal-to-blow-out-to-50b-20240212-p5f49h |archive-date=2024-02-12 |access-date=2024-02-13 |website=Australian Financial Review |publisher=Nine Entertainment Co. |place=Sydney |language=en-au |issn=1444-9900 |oclc=1131035760}} Eslake and Richardson argued that the reform was purely a political move to win seats in WA. WA treasurer Rita Saffioti (Labor) argued that any federal government would "lose every seat in Western Australia" if they undid the reform and said that it was inconceivable that they would do so.{{Cite web |last=Caporn |first=Dylan |date=2024-02-13 |editor-last=De Ceglie |editor-first=Anthony |editor-link=Anthony De Ceglie |title=WA Treasurer Rita Saffioti says GST deal won't be touched as any government who did would lose every WA seat |url=https://thewest.com.au/politics/state-politics/wa-treasurer-rita-saffioti-says-gst-deal-wont-be-touched-as-any-government-who-did-would-lose-every-wa-seat-c-13557478 |url-access=subscription |url-status=live |archive-url=https://archive.today/20240213024928/https://thewest.com.au/politics/state-politics/wa-treasurer-rita-saffioti-says-gst-deal-wont-be-touched-as-any-government-who-did-would-lose-every-wa-seat-c-13557478 |archive-date=2024-02-13 |access-date=2024-02-13 |website=The West Australian |publisher=Seven West Media |place=Perth |language=en-au |issn=0312-6323}}{{Cite web |last=Hastie |first=Hamish |date=2024-02-13 |title=Touch WA's GST and suffer the political consequences: Saffioti |url=https://www.brisbanetimes.com.au/politics/western-australia/touch-wa-s-gst-and-suffer-the-political-consequences-saffioti-20240213-p5f4kk.html |url-access=limited |access-date=2024-02-13 |website=Brisbane Times |publisher=Nine Entertainment Co. |language=en-au |archive-date=13 February 2024 |archive-url=https://web.archive.org/web/20240213074828/https://www.brisbanetimes.com.au/politics/western-australia/touch-wa-s-gst-and-suffer-the-political-consequences-saffioti-20240213-p5f4kk.html |url-status=live }} New South Wales teal independent Allegra Spender gave her support for Eslake and Richardson's criticism of the reform.{{Cite web |last=Jervis-Bardy |first=Dan |date=2024-02-18 |editor-last=De Ceglie |editor-first=Anthony |editor-link=Anthony De Ceglie |title=Kate Chaney 'absolutely' supports GST deal after fellow teal joins chorus of east coast critics |url=https://thewest.com.au/politics/federal-politics/kate-chaney-absolutely-supports-gst-deal-after-fellow-teal-joins-chorus-of-east-coast-critics-c-13613739 |url-access=subscription |url-status=live |archive-url=https://archive.today/20240218095840/https://thewest.com.au/politics/federal-politics/kate-chaney-absolutely-supports-gst-deal-after-fellow-teal-joins-chorus-of-east-coast-critics-c-13613739 |archive-date=2024-02-18 |access-date=2024-02-19 |website=The West Australian |publisher=Seven West Media |place=Perth |language=en |issn=0312-6323}} Saffioti and Chaney said that its repeal would incentivise the state not to invest in mining so as to avoid losing its GST share,{{Cite web |last=Rabe |first=Tom |date=2024-02-18 |title='Kissed on the arse by a rainbow': Economist rubbishes WA's GST claim |url=https://www.afr.com/politics/federal/kissed-on-the-arse-by-a-rainbow-economist-rubbishes-wa-s-gst-claim-20240215-p5f5ea |url-status=live |archive-url=https://archive.today/20240218124702/https://www.afr.com/politics/federal/kissed-on-the-arse-by-a-rainbow-economist-rubbishes-wa-s-gst-claim-20240215-p5f5ea |archive-date=2024-02-18 |access-date=2024-02-19 |website=Australian Financial Review |publisher=Nine Entertainment Co. |place=Sydney |language=en |issn=1444-9900 |oclc=1131035760}} a claim Eslake dismissed.
WA Liberal leader Libby Mettam and Chamber of Commerce and Industry WA CEO Chris Rodwell demanded that Albanese make a formal pledge to maintain the reformed GST arrangements.{{Cite web |last1=Caporn |first1=Dylan |last2=Jervis-Bardy |first2=Dan |date=2024-02-18 |title=WA leaders demand Anthony Albanese lock in pledge for State's fair share of GST |url=https://thewest.com.au/politics/anthony-albanese/wa-leaders-demand-anthony-albanese-lock-in-pledge-for-states-fair-share-of-gst-c-13635870 |url-access=subscription |url-status=live |archive-url=https://archive.today/20240218220445/https://thewest.com.au/politics/anthony-albanese/wa-leaders-demand-anthony-albanese-lock-in-pledge-for-states-fair-share-of-gst-c-13635870 |archive-date=2024-02-18 |access-date=2024-02-19 |website=The West Australian |publisher=Seven West Media |place=Perth |language=en |issn=0312-6323}} Following these demands, The West Australian ran a mockup of such a pledge with space for Albanese to sign: he did so when presented with the newspaper at a press conference, writing and signing the same pledge on journalist Dylan Caporn's arm.{{Cite news |last=Butler |first=Josh |date=2024-02-19 |title=Albanese signs WA GST pledge on reporter's arm and signals possible support for state's nickel miners |url=https://www.theguardian.com/australia-news/2024/feb/19/anthony-albanese-signs-wa-gst-pledge-reporters-arm-marker-nickel-mine-press-conference |access-date=2024-02-19 |work=The Guardian |language=en-GB |archive-date=19 February 2024 |archive-url=https://web.archive.org/web/20240219063353/https://www.theguardian.com/australia-news/2024/feb/19/anthony-albanese-signs-wa-gst-pledge-reporters-arm-marker-nickel-mine-press-conference |url-status=live }}
In March 2024, Minns called for the GST distribution to be calculated according to a per capita formula, and likened WA to a "petrostate".{{Cite web |last=Gramenz |first=Jack |date=2024-03-18 |title=NSW ups fight for GST amid move to 'wellbeing' budget |url=https://www.canberratimes.com.au/story/8558869/nsw-ups-fight-for-gst-amid-move-to-wellbeing-budget/ |url-access=limited |access-date=2024-05-02 |website=The Canberra Times |publisher=Australian Community Media |language=en-AU |oclc=220340116 |archive-date=2 May 2024 |archive-url=https://web.archive.org/web/20240502051749/https://www.canberratimes.com.au/story/8558869/nsw-ups-fight-for-gst-amid-move-to-wellbeing-budget/ |url-status=live }}{{Cite web |last=Wang |first=Jessica |date=2024-03-18 |title=NSW Premier Chris Minns says he can't bargain for lowered immigration amid stoush of GST carve-up |url=https://www.news.com.au/finance/economy/australian-economy/nsw-premier-chris-minns-says-he-cant-bargain-for-lowered-immigration-amid-stoush-of-gst-carveup/news-story/2543d2268bb1f3e1efcf20e63de60324 |access-date=2024-05-02 |website=news.com.au |publisher=News Corp Australia |archive-date=18 March 2024 |archive-url=https://web.archive.org/web/20240318051010/https://www.news.com.au/finance/economy/australian-economy/nsw-premier-chris-minns-says-he-cant-bargain-for-lowered-immigration-amid-stoush-of-gst-carveup/news-story/2543d2268bb1f3e1efcf20e63de60324 |url-status=live }} Eslake and Barnett appeared together at the National Press Club in May 2024 to discuss "the GST debacle",{{Cite web |title=Saul Eslake & Colin Barnett |url=https://www.npc.org.au/speaker/2024/1325-saul-eslake-colin-barnett/ |access-date=2024-06-03 |website=National Press Club of Australia |place=Canberra |language=en |archive-date=3 June 2024 |archive-url=https://web.archive.org/web/20240603063839/https://www.npc.org.au/speaker/2024/1325-saul-eslake-colin-barnett/ |url-status=live }} with Eslake defending HFE distribution and Barnett arguing for a move to per-capita distribution.{{Cite news |last1=Mayes |first1=Andrea |last2=Crowley |first2=Tom |date=2024-05-08 |title=Former WA Liberal premier Colin Barnett calls for GST overhaul based on population |url=https://www.abc.net.au/news/2024-05-08/colin-barnett-saul-eslake-gst-policy-national-press-club/103820476 |access-date=2024-06-03 |work=ABC News |publisher=Australian Broadcasting Corporation |language=en-AU |archive-date=3 June 2024 |archive-url=https://web.archive.org/web/20240603063839/https://www.abc.net.au/news/2024-05-08/colin-barnett-saul-eslake-gst-policy-national-press-club/103820476 |url-status=live }} Following the 2024 federal budget, Chalmers stated that the money spent on the top-up payments was "worth it".{{Cite news |last=Caporn |first=Dylan |date=2024-06-03 |editor-last=Dore |editor-first=Christopher |editor-link=Chris Dore |title=WA's greedy "entitlement" |url=https://thewest.com.au/business/gst/was-gst-deal-un-australian-and-embarrassing-saul-eslake-says-launching-attack-against-west-aussies-c-14849345 |url-access=subscription |url-status=live |archive-url=https://archive.today/20240602233609/https://thewest.com.au/business/gst/was-gst-deal-un-australian-and-embarrassing-saul-eslake-says-launching-attack-against-west-aussies-c-14849345 |archive-date=2024-06-02 |access-date=2024-06-03 |work=The West Australian |publisher=Seven West Media |location=Perth |pages=3 |language=en-au |issn=0312-6323}} Eslake argued that the expense was unjustified and based on an "entitlement mentality", contesting that WA's wealth was simply the coincidental result of having large natural resource reserves and a strong market price for those resources. Saffioti said Eslake was correct that "no one put the iron ore under the Pilbara and the gas under the Northwest shelf", but that they "don’t just jump out of the ground and onto a ship".
Scheduled future reviews
References
{{reflist}}
= Works cited =
- {{Cite conference |last=Nahan |first=Mike |author-link=Mike Nahan |date=2017-08-27 |title=Western Australia and the Goods and Services Tax |url=https://static1.squarespace.com/static/596ef6aec534a5c54429ed9e/t/5cb70981ec212d234a3e923e/1555499395224/Chapter+5.pdf |conference=The Twenty Ninth Conference of the Samuel Griffith Society |language=en-AU |location=Perth |publisher=Samuel Griffith Society |publication-place=Melbourne}}
{{Economy of Australia}}
Category:Taxation in Australia
Category:2017 in Australian politics
Category:2018 in Australian politics
Category:2021 in Australian politics
Category:2022 in Australian politics