Morrison-era GST deal with WA a multi-billion dollar mistake, PC finds

Australia's Productivity Commission (PC) has released an interim report criticizing the Goods and Services Tax (GST) deal with Western Australia (WA) as a "multi-billion dollar mistake" that should be reversed. The commission found that the deal, implemented under the former Morrison government with support from the Labor party, has achieved "almost none of its objectives" and has made the national GST distribution system less equitable. The PC's review, initiated at the request of WA, highlighted that tens of billions of dollars in taxpayer money have since flowed to the state, which it describes as the country's "richest state."

The interim report, released on August 14, 2026, states that the carve-up deal, which has primarily benefited Western Australia, needs to be "reshaped." The commission's analysis indicates that the original goals of the reform have not been met, leading to an unintended concentration of funds in WA. The deal was established to ensure WA received a minimum share of GST revenue, a move that was intended to address concerns about the state's fiscal capacity. However, the PC's findings suggest that the financial benefits to WA have far outweighed any intended positive outcomes for the national fiscal balance or equity.

The Productivity Commission, an independent statutory agency of the Australian government, is tasked with providing advice to government on policies and regulations to achieve better economic performance and improve living standards. Its review of the GST deal with WA is part of a broader examination of fiscal arrangements in Australia. The commission's interim findings are significant as they directly challenge the efficacy and fairness of a major fiscal policy implemented in recent years. The report's call for a reversal or substantial reshaping of the deal indicates a strong divergence between the commission's assessment and the original policy intent.

This criticism comes at a time when fiscal management and intergovernmental financial relations are under scrutiny. The GST distribution system is a complex mechanism that allocates revenue collected by the Australian Taxation Office to the states and territories. The deal with WA was a departure from the standard distribution formula, designed to provide a fiscal floor for the state. The Productivity Commission's interim report suggests that this departure has had significant, and in its view, negative consequences for the overall fairness of the system. The final report is expected to provide more detailed recommendations on how to address the identified issues and potentially reform the GST sharing arrangements across all Australian states and territories.