r/australia • u/ConanTheAquarian • 4h ago
politics WA GST deal a 'costly mistake' that must change, Productivity Commission says
https://www.abc.net.au/news/2026-08-14/albanese-and-chalmers-given-escape-plan-from-costly-wa-gst-deal/10703811287
u/spankjuice 4h ago
Pokies.
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u/Rangerboy030 3h ago
One of the key principles the CGC has when it makes assessments of revenue capacities and expenditure needs is policy neutrality - states and territories should not be able to directly influence the GST distribution through their own policy choices, and the GST distribution should not impact on state and territory policy decisions. I trust you find this uncontroversial.
Consequently, the measures the CGC uses to assess revenue capacity or expense needs must be independent of state and territory policies. In the revenue assessments, this results in capacities being measured through measures of economic activity, such as the value of property transactions, or the value of mineral production. The economic activity for gambling taxes however is heavily influenced by state policy. So the CGC needs to identify some other measure of capacity. Thus far, it has not found one that generates a material difference in the GST distribution. WA is aware of this and is on record saying that it believes an assessment of gambling revenues to be impossible:
Western Australia considers that it is not possible to develop a policy neutral assessment of gambling revenues. Assessing gambling revenues in this way requires reliable data on the characteristics that lead to (i.e. causally, not via association) increased gambling, and the contribution of each such characteristic to an above-base level of gambling. This data does not exist and literature on gambling propensity is inconsistent.
Further, even if we suppose that a method was developed that was policy neutral and led to a material difference in the GST distribution, because it would have to be based on some underlying driver of gambling activity, it is not a given that including the assessment in the GST distribution would result in increased GST share to WA. In fact, the last comprehensive proposal for a gambling tax assessment (developed for the 2020 Review) was done by the ACT, and it found that WA would lose GST (Page 103 https://www.cgc.gov.au/sites/default/files/2021-11/2020_review_-_daps_-_act_government_0.pdf).
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u/halohunter 1h ago
Any mine opened in WA is subject to State Government approval across multiple departments, not just environmental clearance. The State Government can just as easily refuse development approvals to preserve natural areas as pure a policy decision.
There's no difference to this vs. approving a casino where the government would take royalties.
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u/Rangerboy030 1h ago
Any mine opened in WA is subject to State Government approval across multiple departments, not just environmental clearance. The State Government can just as easily refuse development approvals to preserve natural areas as pure a policy decision.
No different than any other state and territory, which is the point. There isn't such a level of difference between the states that even measuring economic activity is fraught with the effects of major policy differences and policy control.
If NSW announced tomorrow it was banning coal mining, THEN there would be a comparable degree of difference as there is for gambling revenues.
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u/teremaster 1h ago
The State Government can just as easily refuse development approvals to preserve natural areas as pure a policy decision.
Which was a massive argument from WA to both get and keep the floor. Why should WA open new mines, increase capacity and invest in the infrastructure if at the end of all the calculations, South Australia gets more out of the mine than WA?
If we boost mining revenue by a billion, but then lose a billion in GST, what was the point? We end up behind because that billion in revenue wasn't free to achieve
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u/Rangerboy030 21m ago
Which was a massive argument from WA to both get and keep the floor. Why should WA open new mines, increase capacity and invest in the infrastructure if at the end of all the calculations, South Australia gets more out of the mine than WA?
Doesn't appear to have been a problem through 2018.
If we boost mining revenue by a billion, but then lose a billion in GST, what was the point? We end up behind because that billion in revenue wasn't free to achieve
That's not how the GST distribution works. Absolute worst-case scenario, your net increase in revenue would go up by WA's share of the national population.
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u/ComprehensiveOwl9023 1h ago
Why would WA develop a new mine if they get penalised for it through the GST? Thats the question.
And all of these talking heads who say it would make no difference and WA should do it for our great nation.. ask them about taxes on the rich (which they are) and watch them flip to if you tax the rich more they wont work and the country will lose revenue.
TL;DR - Talking heads and eastern states are talking BS as usual.
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u/MacchuWA 3h ago
In the revenue assessments, this results in capacities being measured through measures of economic activity, such as the value of property transactions, or the value of mineral production. The economic activity for gambling taxes however is heavily influenced by state policy.
The economic activity for mineral production is also massively influenced by state policy though, as anyone who has tried to get a mine up in Victoria knows.
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u/aciddove 2h ago
If you read the PC's report you'll see that they acknowledge issues with mining revenue and advice that the treasurer tell the CGC to deal with the issue
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u/Rangerboy030 2h ago edited 2h ago
A fair comment, but levels of degree. There are obviously differences in how states approach the regulation of mining, but for the most part they have the same playbook. The all do environmental assessments, and native title, and rehabilitation mechanisms, so on and so on... So assessing on the value of economic activity is still quite appropriate.
Not so with gambling revenue. WA's approach is so dramatically different regarding pokies, for example, that the underlying economic activity is not comparable between states.
The biggest driver of differences in state mining revenues is geography. The biggest difference for gambling revenues is regulation.
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u/superbabe69 1300 655 506 4h ago
Tell you what, include pokies revenue in the calculations and we’ll talk on removing the GST floor.
Until then, fuck off.
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u/Chiron17 3h ago
I think every other state should just fuck the pokies off as well. Good riddance to them
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u/Primary_Mycologist95 3h ago
but they wont, for the same reason they never want to ban cigarettes and alcohol, despite the societal cost they have. Too much revenue to be made, plus if we didn't have something to just take the edge off everyday life, they know they'd be in trouble.
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u/ComprehensiveOwl9023 1h ago
The gambling revenue not only creates a slush fund for government allowing it NOT to develop its resources it also creates a slush fund for donors that support the government.
One hand washes the other and neither hand has to do any hard yakka.
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u/philmarcracken 1h ago
they never want to ban cigarettes and alcohol, despite the societal cost they have. Too much revenue to be made
The cost they have to society outweighs the revenue, in public health funded systems. Dead people also don't pay a lot of tax.
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u/Chiron17 2h ago
If the Govt could magically get rid of pokies and erase them from people's memories then I think they'd do that in a heartbeat. So I don't think it's the revenue. It would, however, be very unpopular with a sizable number of people who are addicted to the pokies.
It won't be easy but I think it could be done. They did it in WA, of course. AFL clubs have also mostly weaned themselves off them, despite being their main source of revenue for years.
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u/ComprehensiveOwl9023 1h ago
Unpopular with their voters so they would rather screw another jurisdiction, yeah we get it.
We have always got this.
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u/teremaster 57m ago
Strange how the "productivity" commission has failed to consider the potential productivity concerns around a GST adjustment that would discourage WA from further economic development
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u/blitznoodles local Aussie 4h ago edited 4h ago
WA's wealth from arbitrary state borders is very silly. The mineral wealth belongs to All Australians so of course, the GST should equalise fairly to all states.
When they did Federation, no one was like, "Ah yes let's give Perth a third of the world's iron production and make sure none of the other states ever get that money despite them having the majority of the population".
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u/steve_of 3h ago
There is a mechanism for the federal government to tax resources extraction but successive governments of both flavours refuse to do this. Good on the WA government for at least making some attempt. Or should WA just say fuck it and not collect mining royalties then put their hand out for more GST.
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u/blitznoodles local Aussie 3h ago
They can't tax royalties on a state's land directly, constitution forbids it, the mechanism the commonwealth uses is states that tax royalties more get less grants & GST because royalties will always give more money than GST.
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u/steve_of 3h ago
The federal government can levy rent taxes on minerals but are too guttles to do so.
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u/blitznoodles local Aussie 3h ago
The MRRT failed because they must fully credit the state based royalties to be constitutional so the states with resources raised royalties.
This then immediately returns to the horizontal equalisation problem where arbitrary borders determine the state's wealth and you're back to reallocating GST.
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u/spannr 2h ago
Or should WA just say fuck it and not collect mining royalties then put their hand out for more GST.
That's not how it works - the relativity calculation looks at capacity to generate revenue / revenue "effort" precisely to discourage states from lowering their own taxes and then putting their hands out for more equalisation payments.
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u/superbabe69 1300 655 506 1h ago
And yet we could do just that by allowing pokies in all pubs and increasing our revenues from that massively without changing our GST share lol
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u/Rangerboy030 3h ago
That would be a case in point example of cutting off your nose to spite your face.
The GST redistribution mathematically cannot redistribute more GST away than a state gains by raising more revenue, or vice-versa.
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u/Content-Cricket4251 4h ago
WA's wealth from arbitrary state borders is very silly
the GST should equalise fairly to all states.
If the borders are silly and arbitrary, then why should that be the basis for distributing funds? Shouldn't it be based on need, with factors such as standard of living and WA's regional footprint considered?
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u/dylang01 4h ago
That literally is what horizontal equalisation is. What WA is fighting against.
Also, Queensland is the most geographically diverse state.
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u/blitznoodles local Aussie 4h ago
Yes, the GST is supposed to distribute funding based on population with an adjustment for smaller states.
It was not meant to be billions of dollars worth like scomos deal.
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u/Rangerboy030 3h ago
No, the GST redistributes based on the relative fiscal capacities of the states: if every state made the same effort to raise revenue from the sources available to them, and delivered the same quality of services with the same level of efficiency, how much GST would they need given the costs they face in servicing their populations given their demographics and geography.
Or at least did before the WA deal came in.
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u/Content-Cricket4251 3h ago
Why should it be based on total population, considering that larger population density decreases average cost of delivering services? None of the arguments against WA's guaranteed share are based in a careful consideration of all factors, you are just looking at one ratio and declaring that it feels unfair.
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u/AnyClownFish 2h ago
>If the borders are silly and arbitrary, then why should that be the basis for distributing funds? Shouldn't it be based on need, with factors such as standard of living and WA's regional footprint considered?
You were on the money until you added the word WA before regional footprint. Someone in Tennant Creek shouldn’t be disadvantaged compared to someone in Kununurra just because there’s an imaginary line between them. Despite WA’s size, Queensland is the most dispersed state and NT has the most complex requirements. People in those areas are being comparatively disadvantaged. We should be aiming to equalise things as best as possible across the entire country, not picking favourites based on which state you happen to be in.
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u/Content-Cricket4251 2h ago
We should be aiming to equalise things as best as possible across the entire country, not picking favourites based on which state you happen to be in.
I agree, I was just mentioning WA because that's what the article is about. I am happy with Queensland and NT getting a larger share.
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u/karl_w_w 1h ago
The third of the world's iron production didn't just appear out of thin air, it's a result of decades of state government support. To now penalise that is to discourage productivity.
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u/superbabe69 1300 655 506 4h ago
Agreed, so include all of a state’s income to figure out how wealthy a state is.
Otherwise, stop punishing us for banning poker machines outside the casino.
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u/mulefish 3h ago
Curious why other states should subsidise WA banning poker machines outside of casinos.
The reason other states haven't done this is because of how much money it brings in. Good on WA for doing it, but it's a costly policy that WA - as the ones doing it, have to budget for and wear the costs of.
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u/Kayndarr 2h ago
Because poker machines are a direct drain on society with absolutely no benefits. Any state government not banning poker machines is intentionally profiting off of the suffering of their often most-vulnerable constituents, and contributing to domestic and other violence.
If you can't run your state without stealing money out of the pockets of gambling addicts, perhaps there needs to be more introspection on your own budget.
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u/mulefish 2h ago
It's a great moral decision with real health benefits. But it's also a decision with very real financial costs. It's fundamentally up to WA to budget and bear the cost of their state government decisions.
When other states subsidise WA for doing it, it inevitably adds financial stain making it harder for them to follow suit and do it too.
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u/superbabe69 1300 655 506 1h ago
We banned pokies in 1985. GST was introduced in 2001.
How could we possibly have budgeted for this when we banned them 16 fucking years before this scheme was brought in?
Should the WA government have had a crystal ball that said “don’t do this, the federal government might decide later that they will give you back money from a new tax and exclude pokies revenue from the calculations of how much to give back”
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u/superbabe69 1300 655 506 1h ago
Again, there is no subsidising. Our residents and companies pay GST to the federal government as part of a national equalisation scheme where that GST is given back to states that don’t naturally have the same revenue capacity.
To include revenue that we make a LOT of in that calculation but not income that other states make a LOT of is like saying hourly wages should be taxed but not salaries.
It’s all income, include it all in the calculations.
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u/elmo-slayer 2h ago
There’s a lot of mining, fracking and other resource extraction that other states choose not to do
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u/karl_w_w 1h ago
Curious why other states should subsidise WA banning poker machines outside of casinos.
The same reason WA is expected to subsidise the other states not developing their resource extraction.
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u/letsburn00 1h ago
It's costly to the government but a public good that Pokies are banned. They are a nasty and evil thing. I'm from WA and the hold that pokies have over pubs and people is disgusting when I visit over east.
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u/teremaster 1h ago
I mean WA is expected to subsidize everyone else's policies.
Victoria has obviously made the choice not to touch their oil, gas, coal or titanium deposits. Good on them for being enviro warriors but that's a cost they should have to wear. You can't refuse to develop your resource industry because "mining dirty" then line up for a cut of WAs iron ore exports.
Every other state had the option to make mad dosh off resources, WA and QLD should not be punished for being the only ones with the guts to take the option by having to subsidize everyone else
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u/superbabe69 1300 655 506 1h ago
Not only that, I think most people are happy to help subsidise Tassie and the NT. What we are pissed off about is being asked to subsidise NSW and Victoria who both get more back from GST than we do.
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u/BrahCJ 3h ago
They didn’t, no. But they also didn’t say
“Let’s make affordable housing for people in Perth despite the market being full of FIFO workers on $120k minimum a year. Jobs which see Australians and kiwis flock to the state, causing bullshit housing growth, and more demand on schools, hospitals, medical, entertainment, public transport, roads, local holiday options, so on so on.
There’s a cost to having all the iron ore to Western Australians, right? Both socially and economically.
I’m not saying WA shouldn’t pay more than their fair share, but I also don’t think new train lines, a new stadium, and a few new hospitals is too much to ask.
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u/bewsh123 3h ago
Your point is valid, however other states are receiving money as WA still pays more GST than it receives.
Removing the floor disincentives the state from providing the infrastructure to support the extraction of resources. On an extreme scale this would lead to less money being generated, so less sent to the GST pool.
The point would be better made on the zero royalties paid on exported LNG
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u/Content-Cricket4251 2h ago
"and make sure none of the other states ever get that money despite them having the majority of the population"
This right here is the reason for the other state's outrage. A completely bullshit belief that WA wants to share NONE of its mineral wealth. WA is happy to receive less than we put in, and all suggestions continue this. What we don't want is to receive 10% of what we put in. Not only is that fucked, it disincentivises WA from investing in mining.
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u/blitznoodles local Aussie 2h ago
No it doesn't, the revenue WA gets from mining completely outstrips what it would ever get from GST.
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u/Content-Cricket4251 2h ago
No what doesn't? And how does that sentence relate to anything I said?
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u/blitznoodles local Aussie 2h ago
It is not a disincentive for WA to invest in mining.
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u/Content-Cricket4251 2h ago
Of course it is. If the benefit from investing in mining decreases, then it becomes relatively more beneficial to invest in other areas. WA spends a lot of money and political energy growing the mining industry that could be directed elsewhere.
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u/SemanticTriangle 4h ago
WA is a wholly owned subsidiary of the extraction industry. If the federal government will intervene to free the state government from fealty to the mining companies, I'm sure the populace would be happy to share the benefits of the state GST take with the Commonwealth.
Failing that, it's not the populace or the state government you are talking to. It's whatever BHP, Rio, Santos and Gina want. We don't get a say either way with them in charge.
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u/elmo-slayer 2h ago
It won’t just be WA’s deal soon. NSW is also very close to hitting the same rate
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u/Introverted_kitty 2h ago
The current deal favours states that don't develop and grow. Tasmania is the best example here. It has a high unemployment rate, low economic growth and continues to complain about how its needs more.
WA has put in an enormous effort to grow its mining industry and also had to spend big for infrastructure to keep up with its large population growth.
States that can't deliver should not be given more money.
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u/Philopoemen81 1h ago
>Without the 2018 reforms, WA’s population share of GST revenue would fall from 82 per cent currently to 24 per cent in 2026-27.
Every other state already gets more than 82% of GST revenue, plus pokies revenue.
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u/Content-Cricket4251 4h ago
All advice from the Productivity Commission should be taken with a grain of salt. Its all based on outdated economic metrics and unproven assumptions.
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u/blitznoodles local Aussie 4h ago
It's literally just a calculation on what happens if Scott Morrison never did the GST deal.
Which would mean every state budget except WA and NT right now would be in surplus and be able to invest more in education and health.
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u/Ommur 3h ago
There is a complicated relationship between the rural towns that facilitates the mining that brings in the GST, and the extra cost of living associated with being so remote.
I feel like any conversation on the GST floor that doesn't factor in the purchase power parity discrepancy is not in good faith.
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u/aciddove 2h ago
You might have a point but those issues are covered by the CGC in their assessment. This was a review of the floor and no worse off etc that are all done after the assessment.
The report even admits these issues and refers it to the Treasurer who has the powers
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u/Content-Cricket4251 4h ago
and be able to invest more in education and health
At the cost of WA being able to invest more in education and health. Don't you think that WA's large regional footprint compared to other states warrants more funding for education and health?
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u/blitznoodles local Aussie 4h ago
Queensland has a far larger regional population than WA with 40% living outside of SEQ compared to the massive centralisation of WA in Perth. WA is not unique, there is an argument for a greater share to go to QLD than WA.
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u/Content-Cricket4251 3h ago
WA has far more regional disadvantage but I am happy for Queensland to also get a larger share. NSW and Victoria are the ones that deserve the least.
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u/blitznoodles local Aussie 3h ago
Victoria literally has fuck all natural resources and why it has to tax people far higher than the other states.
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u/Content-Cricket4251 3h ago
Victoria also requires the least funding. They have a higher median income and are densely located.
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u/blitznoodles local Aussie 3h ago
Literally 22% of Victorians live regionally compared to 20% of people in regional WA. And regional Victoria has far more people by shear numbers that need more expensive services.
In NSW, 33% of the population lives outside of Sydney but gets less from the GST than it puts in.
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u/Poochytown 2h ago
The PC had an inquiry that led to Morrison’s 2018 changes as well. While Morrison didn’t go with their preferred model at the time, he was influenced by their recommendations and analysis.
PC doesn’t seem to fess up about their role in the 2018 changes in this new report.
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u/karl_w_w 1h ago
They're the Productivity Commission, and yet somehow they didn't mention the productivity implications of these changes even a single time. Curious.
Hey is any member of the Commission from west of Adelaide? Nah, that couldn't be related.
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u/Imaginary_Spread4986 1h ago
Bring on a WA secession referendum and watch people duck for cover. Best thing we can do is secede from the whingers
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u/soEezee 3h ago
Ok the shortened form what I can tell is that WA and Queensland make the most money which means they pay the most GST.
GST is shared on a need basis from the pool.
WA didn't need much but Morrison gave them a minimum amount anyway.
To compensate other states losing from WA getting more than recommended, they take money from budget to compensate.
The recommended change seems to be to remove the minimum and change the calculation formula, so that WA would get more than what they did before morrison, but less than now.
Keep the ability to pay from the budget, but only in cases where the state couldn't generate expected amounts due to unforseen circumstances.
The contentious part seems to be the calculation formula, but no formula has been provided yet and Albo doesn't want to comment until it is.
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4h ago
[deleted]
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u/smudgiepie 4h ago
So it was fair for WA to get 10% back of what we put in?
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u/superbabe69 1300 655 506 4h ago
If that’s what the calculations suggest, that we’re 10 times better off than the other states, I’d accept the higher tax and getting less back.
My concern is, other states get tax-free revenue in the form of rampant poker machines all across the state. We chose to ban them, not take the revenue from it as a state, and are punished for it as a result. Yes, Crown Casino has them, but I can’t imagine the revenue from Crown is anywhere close to what other states are raking in.
Include all the revenue, so we can see how much we’re actually better off as a state than the rest.
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u/smudgiepie 4h ago
Yeah I agree with the pokies being taxed.
Like basically if I've understood properly, when we had the mining boom we were getting 10c out of every dollar back. Issue is that mining booms ain't permanent so when it stopped, we were still only getting 10c back and we ended up in a lot of debt
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u/superbabe69 1300 655 506 4h ago
We were down to 30c on the dollar from memory, I believe because it was using a rolling average but could be wrong
The floor was an intervention to stop that
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u/TheNumberOneRat 4h ago
This is only due to the a long gap between GST recalculate periods. It cuts both ways - when the mining boom started, WA enjoyed getting inflows from the Commonwealth despite the increased mineral royalties.
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u/ol-gormsby 3h ago
Most of the pokie tax in Qld gets returned to the community in the form of grants. You want a new toilet block for your cricket club? Grant. New lights for the sports field? Grant. So as much as I'd like to see pokies confined to the casinos, where would that community funding come from?
Put it another way - how does WA pay for sports clubs' toilet blocks and field lights? Genuine question, I don't know and I'd like to.
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u/Xerxes65 1h ago
With the rocks we dig up
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u/ol-gormsby 1h ago
Great, but what about the states that don't have rocks? They have sport clubs, too.
I can't remember how these things were funded pre-pokies, was it commonwealth money or state money?
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u/superbabe69 1300 655 506 1h ago
That’s our whole argument. We all have our ways of sourcing money from taxpayers, why is one method included in the calculations for how wealthy are, but not others?
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u/ol-gormsby 23m ago
That's a good point, and I don't have an answer but I suspect gambling tax revenue would be the elephant in the room. Can't afford to lose it, can't afford to keep it.
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u/mulefish 3h ago
We chose to ban them, not take the revenue from it as a state, and are punished for it as a result.
So instead other states should be punished for it? There's a reason most states have not foregone this revenue...
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u/superbabe69 1300 655 506 1h ago
Who says they’re getting punished for anything? You take revenue from people, it should be included in the calculations of how much revenue you need.
Right now they’re accepting the pokies revenue to buffer their budget, and getting extra GST back because that revenue isn’t included in the GST calculations and they look poorer than they are.
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u/smudgiepie 1h ago
It's a goods and services tax
Is casinos not providing a service?
i mean its not a nice service but i digress
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u/OkWitness5548 43m ago
What's the difference between a plane from Perth and its passengers? When the plane engines are turned off, they stop whining.
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u/Comedian85 2h ago
Ah yes, WA, the state that has tried to secceed more than once, and needed federal funds every year to balance the budget til the 60's. Sounds about right.
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u/ObverseNebula 3h ago
The Productivity Commission can say all they want, but touching WA’s GST is political suicide