AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights
- Western Australia collects significant GST and mining revenue compared to other states.
- Federal politics influence the distribution of GST funds.
- Cash surpluses in WA contrast with deficits in other states and territories.
Western Australia’s fiscal advantage has reignited debates over the distribution of GST revenues, with independent economist Saul Eslake criticizing federal politics for enabling the state to retain a disproportionately large share. The state is set to benefit significantly from GST and mining royalties over the next few years, raising concerns among other states facing financial deficits.
Budget projections reveal that Western Australia is expected to collect $31.4 billion in mining royalties and $32.4 billion from its GST share over the four years leading to 2027-28. Eslake points out this is $21.1 billion more than it would have received under an equal per capita distribution model. This financial edge enables the state to deliver superior public services while maintaining lower-than-average state taxes and charges.
Western Australia’s general government cash surpluses are forecasted to reach $5.8 billion over the period, a stark contrast to the projected cash deficits across all other states and territories, amounting to $149 billion. The federal government is also anticipating a cumulative cash deficit of $133 billion. This fiscal disparity has sparked criticism, with Eslake attributing it to political decisions aimed at securing Western Australian electoral seats, pivotal in federal elections.
Eslake emphasized the federal government’s “munificence” towards Western Australia, which allows the state to reduce its net debt projections to $29.2 billion by mid-2028. In comparison, the combined net debt of the eastern states and territories is projected to surge to $449 billion, equating to 19% of their gross state product (GSP), far exceeding WA’s forecasted debt-to-GSP ratio of 5.25%.
The economist highlighted that changes to the GST revenue-sharing formula deviate from its original intent. The decision, according to Eslake, is one of the most expensive federal policy changes this century, rivaling the financial impact of the National Disability Insurance Scheme (NDIS). He argued that this adjustment imposes a significant burden on other states while bolstering WA’s financial position.
This ongoing disparity in fiscal outcomes has intensified calls for a more equitable distribution of GST revenues among states, with policymakers facing pressure to address the widening gaps in public finances.
