The state government will fight for an overhaul of Commonwealth grants in a move that could swell Western Australian coffers with billions of extra royalty dollars currently flowing to other states.
The Productivity Commission will next year undertake a review of fiscal equalisation arrangements under the GST, including how fair the 2018 changes that have benefitted WA have been.
The WA government wants that review to address what it sees as the “absurd” treatment of iron ore royalties, definitions of remoteness, and support for coastal protection.
Speaking at The Australian’s Bush Summit in Port Hedland on Friday, Deputy Premier Rita Saffioti said the current system punished WA for mining iron ore instead of coal.
“WA retains only nine per cent of its iron ore royalties, while … NSW keeps seventy-one per cent of its coal royalties,” she said.
“A town 300 kilometres away from Hobart is determined the same level of remoteness as areas in the Kimberley.
“And … the cost of maintaining national parks and coastline is determined by population, not by land size.
“States like Victoria get more money to protect their coastline than the state of WA.”
Last financial year, WA generated about $11 billion in royalties, mostly from iron ore, more than double what NSW collected.
The move would come on top of WA’s GST windfall, which since a 70-cent floor was introduced has been a windfall for the state’s coffers, and by 2029 is expected to generate $9 billion.
But it has cost the federal government $52.9 billion to implement, and state and territory treasurers elsewhere in the nation are pushing hard to alter the deal.
Ms Saffioti said the commission needed to better understand the cost of doing business and providing services in WA.
“As part of the 2026 review by the Productivity Commission I will be very much challenging many of the assumptions made,” she said.
“The cost of delivering economic infrastructure that is fundamental to the states economic growth and the national economic growth has to be better realised.”
