A planned overhaul of the GST carve-up is a significant step closer to proceeding, after the federal Coalition partyroom signed off on a new model in a bid to ease concerns of states which were worried their share of revenue would dive.
The Federal Government has now agreed to introduce legislation to change the GST carve up, which not only establishes a floor for the minimum amount each state and territory receives but also guarantees no state will be worse off under the new formula.
That guarantee will exist until 2026-27, with the Productivity Commission to review the system at that point.
The guarantee is designed to allay fears from certain states, including Victoria and New South Wales, that they would be adversely impacted by the new formula.
WA is set to be the big winner under the new system, with modelling showing it will be nearly $5 billion better off over eight years under the Government's proposed changes.
WA governments from both sides of politics have long complained about the existing model, which saw the state's share of revenue drop as low as 30 cents in the dollar in recent years.
Coalition touts fair fix as Labor seeks credit
Treasurer Josh Frydenberg said the latest proposal was a fair outcome.
"A sensible compromise has been reached which will see the Commonwealth legislate that no state or territory will be worse off under the new system to the period 2026-27," he said.
Federal Labor sought to take credit for the Government's decision to include a "no state worse off" guarantee in the legislation, saying it had been pushing for it for weeks.
"Josh Frydenberg scoffed and said I was wrong and it was unnecessary, and he's been dragged in humiliating fashion to Labor's position," Shadow Treasurer Chris Bowen said.
WA Premier Mark McGowan urged all parties to work to ensure the passage of the legislation as soon as possible, saying a fair compromise had been reached.
"I'd urge all sides nationally to get on, get the legislation passed and resolve the issue as soon as possible," Mr McGowan said.
"I think everyone nationally is heartily sick of this debate, especially in Western Australia. Let's fix it now, once and for all."
Mr McGowan said the extra revenue heading west would largely be used to reduce the state's mounting debt bill.
WA's debt is forecast to peak at nearly $41 billion in 2020.
