Why should WA get so much of the GST?

This episode of Late Night Live examines the controversial and costly GST distribution deal that heavily favors Western Australia, now projected to cost the Commonwealth $60 billion by 2029. The arrangement, initially negotiated by Scott Morrison in 2017 and extended by Anthony Albanese in 2024, guarantees WA no more than a quarter of its GST revenue goes to the federal government—despite the state contributing disproportionately due to iron ore royalties. The deal was born out of WA’s economic downturn during the 2014–2015 resources boom collapse, when its GST receipts plummeted under a complex allocation system. However, rising iron ore prices reversed the trend, inflating WA’s GST share and making the deal far more expensive than anticipated. The episode reveals how the system’s opacity—such as the 2025 reclassification of Coffs Harbour from outer to inner regional center, costing NSW $200 million—has fueled frustration among other states like NSW, Queensland, and Victoria. Despite widespread recognition of the flaws, political gridlock and competing state interests prevent reform. The Productivity Commission is currently reviewing the entire framework, offering a sliver of hope for change by year’s end.