Mark McGowan compared to Gollum amid GST feud over huge WA Budget surplus

WA Premier Mark McGowan's big surplus has drawn anger from other states, including NSW Treasurer Dominic Perrottet. (ABC News)

The New South Wales Treasurer has labelled Mark McGowan as the "Gollum of Australian politics", amid renewed state bickering over GST revenue following WA's record-breaking budget surplus.

But the WA Premier said state leaders who complained about the GST distribution were looking for something to blame "for their own mediocre budgeting".

"You can just picture him over there in his cave with his little precious, the GST," NSW Treasurer Dominic Perrottet told Sky News, in reference to WA's $5.6 billion budget surplus.

"Yesterday he [Mr McGowan] lashed out at premiers across the country before they have even said anything."

WA is the only government in Australia and one of very few anywhere in the world which is currently running, and expecting to run, budget surpluses.

Gollum is a fictional character from The Lord of the Rings. (Lord of the Rings)

The state's coffers were significantly boosted by record iron ore prices, and higher than expected GST revenue.

WA bracing for new GST battle

When handing down his first WA Budget as Treasurer, Mr McGowan foreshadowed an impending fight over the GST system, which WA fought for years to change.

At one point, the system saw every dollar of GST revenue raised in WA return just 28 cents to the state's coffers, but the federal government's floor of 70 cents in the dollar has boosted the state budget by billions.

"They [other state leaders] will be wildly angry and they will want to undo the GST deal," Mr McGowan said on Thursday.

"We will have to keep fighting for it.

"It is up for review in 2025 and lots of the other states have tried to bring forward the review so we have to stop that.

"And then when the review takes place, we have to make sure that the existing arrangement continues."

Mr McGowan's budget outlined a $5.6 billion surplus for 2020-21, then a $2.8 billion result for this financial year. (ABC News: James Carmody)

And Mr McGowan insisted NSW was only complaining because of its own mistakes.

"They will be wanting to undo the GST deal because they failed to budget properly," he said.

"New South Wales failed to manage COVID and so they will want us to pay."

'Not good policy': NSW Treasurer

But Mr Perrottet took aim at WA's budget, saying there was little in the budget to protect the state from future downturns.

"The reality in WA is they have a very volatile economy," he said.

Mr Perrottet's budget position has declined sharply over the course of the pandemic. (ABC News: James Carmody)

"Back when they had a Liberal government over there they squandered those years of surpluses and the deal that they obtained with the Federal Government ensured that that was protected well into the future.

"That is not what good public policy is.

"What struck me about yesterday's budget in WA is a substantial surplus but no reform there to actually protect those monies into the future when there is a downturn."

GST carve-up hard to defend: economist

Independent economist Saul Eslake described the current GST system as "outrageous".

"My view, and not just because I'm a Tasmanian, is that this deal that was imposed on all states and territories by the Morrison government three years ago, is simply outrageous," he said.

"It is very hard to defend changes in GST revenue sharing arrangements that transfers as much money as it does from the federal government, which is running record deficits.

"And prospectively in the future from other state governments that are running deficits to the only government in the country and one of the few in the world that's running very large budget surpluses.

As well as GST revenue, WA's budget surplus was fuelled by higher than expected iron ore prices. (ABC News: James Carmody)

"So big that it's resorting to accounting devices to hide just how big some of those surpluses are.

"And I think the other states and territories are right to feel a bit aggrieved about this."

WA given 'advantage', Gutwein says

Tasmanian Premier Peter Gutwein said the current system was not in the nation's best interest.

"It will pit one state against others," he said.

"What we are seeing now are the worst of the concerns that we raised with the Productivity Commission a couple of years ago, in that a state that has got buoyant revenues — predominantly from the mining sector — is now also receiving what I would view as being an overly generous share of GST.

"They will be able to provide better services, better support, lower taxes for Western Australians.

"They will, in effect, be provided with an advantage that the rest of the country won't have."

The federal government was expected to post a $161 billion deficit in 2020-21.


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