Anthony Albanese to face WA GST showdown as he’s expected to fly into Perth next week

Anthony Albanese will fly into the eye of a GST storm as he hosts his Cabinet in WA next week following a Productivity Commission review which labelled the 2018 deal a “costly mistake”.

A group dedicated to defending the State’s GST — made up of prominent WA businessmen Michael Chaney, Andrew “Twiggy” Forrest, Nigel Satterley and John Poynton — will be on hand to greet him for a scheduled roundtable.

Mr Satterley told The Nightly that the group would be inescapable for the Prime Minister and planned to highlight WA’s economic importance as Australia’s future AUKUS home, ship building hub, critical minerals driver and fuel resilience leader.

Mr Satterley said he believed WA had put in “balanced and very thorough” submissions and looked forward to “talking it through” with the PM next week.

“We’re going to speak to him when they’re in Perth. We have got a very logical, sensible argument,” the prominent West Aussie said.

“I’ve known him for a long time, and I’d be very disappointed if he goes back on this.

“They don’t get it in the east. We are the economic powerhouse. We think the argument, if they’re sensible, is in favour of Western Australia.”

It comes as a war of words has broken out between the state treasurers, economists, current and former politicians.

It includes architects of the 2018 deal — former Liberal prime minister Scott Morrison and ex-finance minister Mathias Cormann — who have disputed the Productivity Commission interim report which was released on Friday.

NSW Treasurer Daniel Mookhey and his Queensland counterpart David Janetzki have both argued for a greater share for the $102.5 billion Federal GST pool.

While WA will receive $9.3 billion from the GST in the distribution for 2026-27, NSW receives $26.1b and Queensland $18.4b.

To justify a larger share, both Mr Mookhey and Mr Janetzki echoed the same argument as WA Treasurer Rita Saffioti that the funding was crucial for establishing and expanding lucrative industries like the resources sector.

“If the logic that WA is arguing for is to apply across the board, then every other state that’s either developing those resources, or looking to, is entitled to the same benefit,” Mr Mookhey said.

Mr Janetzki argued that Queensland was “bearing the heavy load of nation building” through its push to supply 96 per cent of the east coast gas market within a decade.

“We’ve got a strong gas industry here, and yet we are being penalised for developing, exploring, exporting our gas,” he told News24.

“While other states are actually being advantaged by making policy decisions which sees them shut down their gas industries or fail to explore their gas industries.

“The pie across the nation continues to get larger, and yet Queensland’s slice of that pie gets smaller every year.”

South Australian Treasurer Tom Koutsantonis claimed on ABC radio that the 2018 deal “unfairly” enriched the wealthiest State, which didn’t align with the principle of ensuring all states have equal services.

Mr Janetzki insisted the interim report provided an “evidence base” to validate east coast states and allow them to “all go forward and encourage more nation-building prosperity”.

Mr Morrison pointed holes in the current commentary on the reforms in a 1146-word opinion piece in the Australian Financial Review on Monday, saying the deal shouldn’t be discussed as a “zero-sum transaction”.

The former Liberal leader insisted it was a necessary policy to create economic incentives and that the Commonwealth, not WA, gained the most overall.

Prior to the 2018 changes, the model stripped away GST allocations as royalties rose which penalised states for developing their natural resources.

Mr Morrison reminded commentators that the further funds WA received were offset by the massive revenue windfalls the Commonwealth gained from the State through high iron ore prices.

He also argued that the 2018 changes came after the Productivity Commission flagged that there was a concern with the previous arrangement.

“The reforms responded to a defect identified by the Productivity Commission’s 2018 inquiry into horizontal fiscal equalisation: that equalisation was being pursued above all else,” he wrote.

“And that the objective should be revised from giving every state the fiscal capacity of the strongest to a reasonable standard of services.”

He argued WA then “invested in the approvals, infrastructure, ports and policy settings needed to build one of the world’s most productive resources sectors”.

“Generating export earnings, employment and very large tax receipts for the Commonwealth,” he said.

“Yet without reform, WA’s counterfactual GST relativity in 2023-24 would have fallen to 0.09786 — less than a tenth of its equal per capita share. No federation should regard that as sustainable or fair.”

Mr Morrison wasn’t the only former Liberal to come out of the woodwork after the report dropped, with his federal frontbencher Mr Cormann and ex-State colleague Colin Barnett also making media appearances to defend WA’s GST.

Mr Corman — who is now the secretary general of the OCED — has made multiple media appearances, including in interviews with The Sunday Times and ABC Radio National, since the report was published.

Both in his own personal capacity to outline why he believed the formal Liberal government’s move to cement the 2018 overhaul was critical and expressed his disappointment in the Productivity Commission’s findings.

“I fundamentally disagree. It was a very important reform to federal financial relations, addressing a very significant unfairness for the state of Western Australia,” Mr Cormann told ABC.

“Also a real problem when it comes to the incentive arrangements in our federation in relation to state economic development, in particular to the resources of the mining sector.”

In an opinion piece for The Sunday Times, Mr Cormann said he was “surprised and disappointed” by the report and insisted that without the deal WA would have remained trapped in “extreme, unprecedented and unfairly low levels of GST distribution for another decade at least”.

Mr Barnett labelled the report a “disappointment” and accused the Productivity Commission of failing to propose meaningful reform to a GST distribution system.

“The Productivity Commission didn’t apply good economic principles. And yet, that’s its job,” he told News24.

“That’s its job to provide economic and productivity reform across Australia.

“So to Chris Minns and so on, stop grizzling about Western Australia, sort out your own performance on the East Coast.”

He also warned of the tension the debate has caused, saying it could lead to “a loss of stability in Australia’s federal relations from one state to another, and to the Commonwealth”.

Mr Janetzki appeared to have been mistaken over the timing of the review, after arguing on News24 that because Treasurer Jim Chalmers penned the terms of references it was proof the Federal Government found fault in the carve up.

“The terms of reference for this review from the Productivity Commission were signed off by Jim Chalmers, and so clearly the Federal Government had believed that there was an issue here, in the carve-up of the GST,” he said.

The Productivity Commission review, however, had been legislated into the 2018 changes to always take place at the end of 2026.

The Prime Minister is also expected to meet with resources sector representatives on the GST while in Perth next week, with the domestic gas reservation, Capital Gains Tax changes and environmental reforms also expected to form part of industry discussions.

WA Premier Roger Cook had sent a formal letter to the Prime Minister late on Friday evening to warn of the threat of any change to the GST deal to infrastructure. It came after the PM gave him personal assurances over the GST on the phone last week.

Speaking in Perth on Monday, Mr Cook revealed the PM hadn’t responded to the letter but said he had confidence the PM understood threat WA’s GST should remain unchanged and claims Mr Albanese had “endorsed” that view.

Asked why he felt it was necessary to send a letter when the PM had already given him personal assurances over the GST on the phone last week, Mr Cook said “we don’t take anything for granted”.

“I absolutely believe him. I’ve been delighted that the Prime Minister has endorsed our views with regards to Western Australia’s share of the GST,” he said.

“But we know that the Government, both the Prime Minister and the Treasurer, are under a lot of pressure.

“You’ve seen on the east coast that there are a lot of people who are lining up to have a go at WA, the other state governments, the Productivity Commission.

“Sitting over here in WA, you don’t appreciate just how loud the call is by the other states to take more of our GST.

“So we have to continue to work hard to support the Prime Minister in his stance.

“I think we need to stand up for WA now more than ever.”

Patrick Gorman described WA as a “donor state” saying that out of every $4000 in GST paid by an average West Aussie, only $3,000 is returned to the State.

WA Senator Ellie Whiteaker said she believed her Labor leader’s commitment was “rock solid” for a fair share of the GST.

“We fought for WA to receive its fair share of the GST from opposition, and Western Australians can be assured that we will always make sure that we receive our fair share,” he said.

The PM’s visit West will also collide with the early polling centres opening for the State by-election in the seat of Secret Harbour, which has morphed into a race between One Nation and Labor.