Scott Morrison and Mark McGowan in Perth during the 2022 election campaign. Morrison’s plan to boost WA’s GST is on track to cost taxpayers almost $25 billion.Credit:Matt Jelonek/Getty Images
The Commonwealth Grants Commission every year allocates the GST based on a complex calculation of the relative financial strength of each jurisdiction. Due to high inflation the tax is expected to raise a record $86.2 billion in 2023-24.
Throughout the 2010s,WA’s share of GST collapsed due to the surge in the state’s iron ore royalties. In 2014 it reached an all-time low of 30 cents for every dollar raised within the state.
As treasurer in 2018,Morrison struck the deal that WA would receive a minimum of 70 cents in the dollar from 2022-23 before increasing to 75 cents in 2024-25. When the policy was put in place,it was expected iron ore prices would fall and WA’s share of the GST pool would therefore rise. Instead,prices soared and have remained elevated ever since.
The Morrison government ensured other states and territories would not be worse off under the deal,requiring top-up funding from outside the GST pool.
The plan was originally forecast to cost federal taxpayers $2.3 billion over three years,including just $293 million in 2021-22,but the surge in iron ore prices has meant larger top-ups for longer.
In October,Treasurer Jim Chalmers revealed the cost in 2021-22 had jumped to $2.1 billion,was forecast to reach $4.1 billion this year and then edge up to $4.3 billion in 2023-24.