WA paid to keep Australia afloat

When Australia suffered through its first major pandemic lockdown last year, Western Australians supported other states to the tune of more than $21 billion.

The latest numbers showing WA's net contribution to the federation were released in today’s budget, revealing a figure of $21.2 billion in the year to June 2020.

It is the highest level of WA’s cash flowing east since the golden years of the resources boom.

Calculation of the figure includes all tax revenue, beyond just the GST, and estimates the share of federal government spending which is allocated to WA, including the state’s share of defence.

Businesses and residents of WA paid a combined $64.7 billion in tax to the Commonwealth, while federal spending for the benefit of WA was about $43.5 billion, state treasury estimated.

That equates to a net contribution to other states, via the Commonwealth, of about $8,000 per person from WA.

New South Wales was the only other state to contribute, adding about $6 billion into the system more than it withdrew, but that only amounts to $743 per head.

For WA, the GST is only a small portion of the net outflow, at about $1.6 billion.

The real revenue windfall for federal government was from company tax payments, accounting for about half of WA's net contribution.

That would have been supported by a strong resources sector and a high iron ore price in the 2020 financial year.

The numbers will be a boost for Premier Mark McGowan as he seeks to combat potential lobbying from eastern states governments for changes to the GST distribution after WA posted a $5.6 billion operating surplus last financial year.

“I kid you not, they’ll be wildly angry,” Mr McGowan said today.

“They’ll be wanting to undo the GST deal because they failed to budget properly, New South Wales failed to manage COVID and so they’ll want us to pay.

“We have to fight back and we’ll continue to fight back.

“We’ll do our best to stop any undoing of the GST deal.”