‘How do they sleep at night?': Allan and Minns governments, experts demand Albanese fix GST

The Age

2 days ago

A powerful bloc of eastern states is demanding Prime Minister Anthony Albanese fix the broken GST system, as influential economists urge the government to use its thumping election mandate to wean Western Australia off a sweetheart deal on track to cost taxpayers $60 billion over 11 years.
As Albanese and his ministers descend on Perth for a special cabinet meeting on Tuesday, his government is facing renewed pressure to kill off a Coalition-era policy that hiked WA's GST haul and has been dubbed the 'worst public policy decision in Australian history.'
The policy that guarantees each state a minimum proportion of the GST raised in their jurisdiction has turned into the already-strained federal budget's single biggest blowout at a time when spending demands are growing in defence, aged care, NDIS and interest on the national debt.
Complaints from WA leaders after the 2016 election, when Malcolm Turnbull clung onto power by maintaining a swag of seats in that state, led to him and then-treasurer Scott Morrison to prop up the state's GST allocation even though it was bathing in mining royalties and has continued to post surpluses.
Scott Morrison and Albanese remained committed to the arrangement and Labor extended it last term after it too won a narrow majority of seats in 2022, key to which was snatching four WA electorates off the Coalition.
But state governments and experts are now calling for change, with a review of the WA rules next year providing Albanese and Treasurer Jim Chalmers a chance to change course.
Victorian Labor Premier Jacinta Allan called out WA's GST riches before delivering a state budget last month, and she told this masthead her state would continue fighting for a more equitable GST.
'Since the inception of the GST, Victoria has received $31 billion less than its population share over that period of time. So, we've been receiving less GST than we send up to Canberra and it goes off to resource rich states like Western Australia and Queensland,' she said.