Anthony Albanese’s GST pledge, signed with a Sharpie two years ago, is back under pressure after the Productivity Commission delivered an interim review of the GST deal struck by the former Coalition government in 2018 and inherited by Labor. The whole arrangement has become a tidy little lesson in how power works: Canberra makes the rules, the states fight over the scraps, and ordinary people are left with the bill.
Two years ago, the prime minister took a Sharpie from a West Australian journalist to sign a paper pledge to retain the state’s GST deal. He then grabbed the reporter’s arm and scrawled “no change to WA GST,” even suggesting the signature would make a nice tattoo. The ink may be gone. The political debt isn’t.
Who Pays for the Deal
The commission found that the 2018 changes guaranteed states a minimum GST share while Canberra agreed to compensate states left worse off than under the previous system. In practice, it found one state had been left significantly better off: Western Australia. Every other jurisdiction has required “no worse off” payments since the new standard took effect, and that has come at a considerable price.
The reforms were expected to cost the Commonwealth about $5 billion by 2024-25 but have instead soared to almost $23 billion. That’s not a rounding error. That’s a transfer of public money through a system designed at the top and paid for by everyone else below.
The commission said the 2018 changes had weakened the GST system’s principle of smoothing out differences between states so Australians can receive broadly comparable public services regardless of where they live, without delivering sufficient improvements elsewhere. Its preferred prescription is to unwind the central architecture of the deal, move back towards the pre-2018 system and deal directly with the particular distortion caused by WA’s dominance of mining revenues.
That’s the machinery speaking plainly. The arrangement was built to manage inequality between states, but the commission says it ended up rewarding one jurisdiction while forcing the rest to absorb the cost. The apparatus did what apparatuses do.
Who Gets the Say
Every other state welcomed the commission’s interim findings on Friday. South Australia said the current GST carve up was a “dog of a deal,” while NSW branded the recommendation to ditch it as “historic.” Victoria said the current deal should be “scrapped,” a move Queensland agreed was in the “national interest.”
West Australian Premier Roger Cook criticised the “east coast clowns” behind the commission’s report. He said, “The change would punish Western Australia for its success, simply to prop up other lazy states.” Cook said he had spoken to Albanese, who had told him the current GST arrangements would “remain.” When asked, Albanese was more careful and only promised WA would get a “fair” deal. He also emphasised the review was a product of the Morrison government’s own legislation.
That’s the familiar dance. Premiers posture, the prime minister hedges, and the public gets told the arrangement is fair enough if everyone keeps repeating the word “fair.”
The Election Math Behind the Promise
Independent economist Saul Eslake could have released a statement simply saying “I told you so” after the report was published. The state was crucial in delivering Albanese to government in 2022, producing a double-digit two-party swing and four additional Labor seats as the Coalition vote collapsed. Rather than snap back three years later, the west consolidated as Labor territory. Albanese emerged from the 2025 election with 11 of WA’s 16 seats.
While the political importance of keeping WA happy has not disappeared, Labor is no longer as dependent on the west as it appeared after 2022. Queensland delivered 12 seats to Albanese last year, while Tasmania returned four Labor MPs out of five. The numbers matter because they show how quickly electoral gratitude gets recalculated once the votes are counted and the bargaining starts again.
The next meeting of the national cabinet due later this month is expected to include discussion of the Albanese government’s plan to legislate national standards for data centres, regardless of what the states and territories think. Queensland Energy Minister David Janetzki said the state doesn’t support “underdeveloped ideas that hand increased power to Canberra.”
Albanese has so far presided over a relatively harmonious federation, or at least been able to find the money to make tough deals more palatable. Labor is confident the public is overwhelmingly on the side of tougher data centre regulation, but on GST there is going to be political cost. The Productivity Commission report is only an interim one, so Albanese can wait for the final recommendations in December before making a choice. The promise on that journalist’s arm disappeared long ago. The structure behind it is still there, and it’s the rest of the country that keeps paying for the privilege.