Labor’s tax bargain and the NDIS bill both surged — but only one was treated as untouchable
Australia’s federal politics is again circling two expensive promises: a GST deal for Western Australia and the National Disability Insurance Scheme, both of...
Australia’s federal politics is again circling two expensive promises: a GST deal for Western Australia and the National Disability Insurance Scheme, both of which have blown out by billions. But while one has been criticised as a costly political fix, the other still carries a kind of protection in Canberra.
Former prime minister Scott Morrison is back in the frame because of a 2018 deal he stitched up as treasurer to give WA a bigger share of Goods and Services Tax revenue. At the time, he said the arrangement would cost the federal budget about an extra $5 billion over roughly six years. The expected hit later rose to $5.4 billion. Small change, by federal standards. Not really.
The deal came after years of political anger in the west. WA’s share of GST revenue had fallen to 30 cents for every dollar collected, a result of the way its high iron ore royalties fed into the formula that decided how much the state was owed. Morrison promised the Commonwealth would top up WA so it would always receive a floor of at least 75 cents for every dollar it raised.
That was the politics. The economics were harsher.
A westward political patch
When Morrison was asked by a reporter in 2022, a few months before the federal election, whether he had neglected Western Australia, the question clearly landed. The Coalition had been under pressure in the mining state, where the GST system had become a potent grievance. The 2018 bargain was designed to stop that damage.
It did not matter politically in the end, at least not enough to rescue the Coalition from the backlash. Economists, including Saul Eslake, later described the arrangement as the worst deal in policy history. That judgement has stuck because the Commonwealth agreed to lock in a floor for WA, even as the bill to the budget kept growing.
The story has a wider lesson for governments far beyond Australia. Federal systems often promise neat formulas, but politics has a way of rewriting them. When a resource-rich state feels short-changed, national leaders tend to pay up. The cost can linger for years.
One bill is not treated the same
The NDIS also blew out by billions. Yet it is the kind of spending Canberra treats differently. The scheme sits in a far more protected category, with political and moral weight that makes it hard to touch, even when costs surge.
That difference matters. One program was a negotiated fiscal patch to quiet a state backlash. The other is a major national social service tied to disability support, and the word “sacred” in Canberra carries real force here. Budgets may strain. Governments may complain. But some spending lines survive the cuts.
For Treasury, the contrast is brutal. For voters, it is simpler: one bargain was made to solve a regional problem. The other is now woven into the structure of the welfare state. And in federal politics, that usually decides everything.
