Queensland Premier Anna Bligh says any plan by the state's opposition to form a breakaway COAG bloc with NSW and Victoria beggars belief.
Australia's most populous eastern states could all have a conservative government within months, with opinion polls showing the Liberal National Party on course to win the next state election.
Queensland's acting opposition leader Tim Nicholls is considering joining an eastern states alliance that would dominate negotiations at the Council of Australian Governments (COAG), The Australian reports.
Mr Nicholls said the capacity of states to raise money was being more centralised with the federal government but they were expected to spend more money on health and ageing services.
Federal Treasurer Wayne Swan has redrafted the review of the GST carve-up, insisting states may be penalised if they raise mining royalties or fail to dump inefficient taxes, including stamp duty and payroll tax.
WA Treasurer Christian Porter said the move was all about trying to find a way to force the GST review panel to punish states for doing what they are constitutionally entitled to do - to change royalty rates.
Ms Bligh said under the constitution the states owned their minerals and were entitled to put a royalty on them.
The premier said there were no immediate plans to raise royalties in Queensland but the government should retain the right and vigorously fight for the right to maintain their royalty levying powers.
"Queensland's ally in seeking changes to the GST formula is Western Australia," Ms Bligh told Sky News.
"NSW and Victoria currently are the beneficiaries of the formula; in fact Western Australia and Queensland currently subsidise NSW and Victoria in the GST carve-up.
"So I'd scratch my head why anyone would hitch their wagon to Victoria and NSW and frankly why any Queenslander would contemplate it just beggars belief."
WA Liberal Premier Colin Barnett has long fought with the federal government over the GST carve-up, claiming his state is ripped off in the return it gets on the GST it hands over.
Ms Bligh agrees.
"The two big states that are going to change the Queensland and the Australian economy over the next decade are Queensland and Western Australia.
"I'm going to put Queensland first and I expect Colin Barnett will put WA first."
Mr Barnett said a move to form a bloc by NSW and Victoria would weaken Canberra's ability to manage the national economy.
WA would not join the other Liberal states because its issues were quite different.
Tasmania, another Labor state, has complained about the "self interest" of NSW and Victoria, while South Australia's Acting Labor Premier John Rau was concerned about the "eastern states club".
The last COAG meeting was held in August last year, and the next meeting is expected to be held in March.