The PM has ruled out changing WA’s GST deal. But there’s another option to consider

Anthony Albanese is standing by his promise this week that “there will be no change […] whilst I’m prime minister” to Western Australia’s current share of the goods and services tax (GST).

That declaration came less than a fortnight after the federal government’s independent advisory body, the Productivity Commission, recommended a “substantial” overhaul in how GST revenue is shared between states.

Its review found a 2018 Morrison government deal that continues to this day had been “a costly mistake”.

The Productivity Commission is still due to hand down its final report and recommendations by December 31.

But given the prime minister has now guaranteed WA’s GST arrangements won’t change, where does this debate go from here? My research suggests an alternative way to tackle the problem.

Australians pay more for this deal The Productivity Commission’s recent interim review found the current way of carving up GST income had cost Australian taxpayers almost A$23 billion – far more than expected.

Most of that money has flowed to WA.

The current deal guarantees that no state can be assessed to be more advantaged than the so-called “standard state” (NSW or Victoria).

Yet WA is the most advantaged state because of its mining royalties, so it benefits from the guarantee.

Read more: ‘A costly mistake’: new review finds giving WA billions in extra GST was unfair to other states In 2026/27 alone, the Western Australian government will receive an extra $6.6 billion more than it would have received under the old arrangements.

This extra amount is a cost to the federal budget.

This cost has to be funded somehow.

For example, if funded through personal income tax, the $6.6 billion would add an extra 1.7% on top of the $382.4 billion in personal income tax that Australians already pay.

A principled way to share GST The current deal undercuts a principle known as “ fiscal equalisation ” – a concept Australia has applied for generations.