Australia’s GST deal is under fresh fire as its price tag nears A$60 billion
?s long-running fight over how to split the goods and services tax has flared again, with a 2018 deal struck to ease West Australian anger
Australia’s long-running fight over how to split the goods and services tax has flared again, with a 2018 deal struck to ease West Australian anger now facing sharp criticism as its cost swells toward A$60 billion. The arrangement, once budgeted at A$2.3 billion, is being paid for by taxpayers nationwide.
The latest backlash follows an interim report from the Productivity Commission, which has taken aim at the Morrison government-era compromise and the way it reshaped the distribution of the A$103 billion GST pool between the states and territories. The scale of the blowout is now so large that it outstrips the original estimate many times over. Small number on paper. Huge bill in practice.
A deal meant to calm WA
The 2018 plan was designed by then treasurer Scott Morrison to placate Western Australia, which had been furious about receiving too little of the GST. Under the deal, WA was guaranteed a minimum share of the pool before the system later shifted to one where New South Wales or Victoria sets the floor below which no other state or territory can fall.
What began as a political fix has become a fiscal headache. The interim report says the arrangement is heading toward A$60 billion over 11 years, a blowout that dwarfs the original budget and now hangs over the federal system as a major long-term cost. The commission’s language is blunt: it called the deal a mistake.
The political bulldust around the numbers
The debate has also turned into a war of words. Defenders of the system have spent the past fortnight trying to justify how the GST is carved up, even as criticism builds around the size of the bill and who ultimately pays. The source material describes the discussion as suffocating under “bulldust” — political spin masking a very expensive problem.
For states and territories, the GST remains central to funding services and balancing budgets. For the federal government, any change to the formula can create winners and losers fast. That is why this deal still matters far beyond Canberra: it shapes public finances in every part of the country and sends a signal about how far governments will go to settle regional grievances with federal money.
What happens next
The Productivity Commission’s interim report has sharpened pressure on policymakers to defend the arrangement, or rethink it. With the cost still climbing, the controversy is no longer just about the original bargain for Western Australia. It is about whether a short-term political fix should keep draining taxpayers for more than a decade.
As the report put it, the deal was a mistake. And now the bill is still growing.
