The opposition leader, Bill Shorten, has called on the federal government to make a one-off $300m payment to Western Australia to defuse a growing brawl between the states over the distribution of goods and services tax revenue.
Tony Abbott has signalled a hands-off approach to the GST carve-up in the lead-up to a Council of Australian Governments (Coag) meeting on Friday, saying it was a matter for the states and territories “to sort out amongst themselves”.
Some of the prime minister’s senior ministers have expressed sympathy with the WA government, which is set to receive less than 30c from every dollar in GST contributions its citizens make next financial year. WA revenues have also been particularly affected by plunging iron ore prices, and the ratings agency Standard and Poor’s put the state on credit watch earlier this week.
The WA premier, Colin Barnett, increased interstate tensions on Thursday by suggesting Victoria should remember that WA was “the most generous state” in providing assistance after the deadly Black Saturday bushfires of 2009.
Shorten visited Perth on Thursday to call on Abbott to resolve the dispute by granting “transitional” assistance to the WA government in the next federal budget, to be delivered on 12 May.
“This could be through a one-off payment or through bringing forward an existing allocation for infrastructure projects,” the opposition leader said.
Shorten said falling iron ore revenues compounded problems arising from Barnett’s stewardship of the WA economy and Abbott’s budget cuts affecting the states.
“There’s a trifecta of trouble for WA arriving in almost a perfect storm of circumstances,” he said.
Shorten did not call for changes to the methodology used by the Commonwealth Grants Commission to distribute GST revenue, but said WA was suffering because of the lag time before its present financial circumstances would be taken into account in the carve-up calculations.
A separate grant would solve the problem of other states and territories having to surrender some of their share of GST revenue in order to increase the WA contribution.
Shorten said leaving it to the states and territories to sort out was a “recipe for failure”.
He nominated $300m as a potential figure, but this was “a number to get the ball rolling” and Labor would consider any solution proposed by Abbott.
Abbott has previously described WA’s circumstances as “unprecedented” but said GST matters should not be touched “without the consent of all the states and territories”.
“I hate to say this to the states and territories, but the states and territories really should sort this out amongst themselves,” the prime minister said on Tuesday.
“It’s money that belongs collectively to them and collectively they should make a decision and being the grown-up adult governments that they are, that’s what I expect them to do.”
Abbott said he would give state and territory leaders “a polite hearing” when they met him for Coag talks in Canberra on Friday.
Other states have strongly resisted the notion that they should forego some of the revenue allotted to them in order to increase the share earmarked for WA.
Barnett invoked memories of the devastating Black Saturday bushfires as he took aim at the Victorian government over its stance on the GST distribution.
“When Victoria had those tragic fires a few years back, Western Australia was the first state and the most generous state to provide financial assistance,” Barnett told 6PR on Thursday.
“Perhaps the new [Victorian] treasurer [Tim Pallas] has got a short memory, or perhaps he’s not aware of that.”
Shorten said Barnett’s comments were “deeply unworthy of a leader” and “no one should ever use a tragedy like this to play politics”.
The Victorian premier, Daniel Andrews, indicated he would seek an apology.
Barnett told Sky News he would apologise to families if he had caused them any offence, but would not say sorry to the Victorian government.
