NSW and WA Premiers set for GST showdown after new leader says he won’t back down

A war of words has erupted between two state premiers over one of the most hotly contested issues in Australian politics.

West Australian Premier Mark McGowan has hit back at his NSW counterpart Dominic Perrottet as a GST spat between the two leaders flares up.

Mr Perrottet, who was sworn in as NSW’s 46th premier on Tuesday, spent years as state treasurer arguing for an overhaul of the GST system and has traded barbs with Mr McGowan over the issue in recent weeks.

Mr Perrottet has argued the existing allocation of GST compensation payments put a heavy financial burden on NSW and Victoria while WA’s economy boomed.

“I’m not going to stand by and have NSW worse off because, while there might not be that much public interest in GST reform, it’s GST that pays for our schools and our hospitals and our nurses and our teachers and our police officers,” he said on Tuesday.

But Mr McGowan – whose state recently handed down a $5.6 billion budget surplus – said he was tired of listening to people like Mr Perrottet “whinging”.

“They never stop whinging,” he told reporters in Perth.

“The NSW government have been very poor financial managers, they now have massive deficits and massive debt.

“They managed Covid very badly, and can see the consequences … And so instead of looking in the mirror, they look west to blame us for this situation.”

Mr McGowan claimed his state’s booming economy was propping up the Commonwealth government’s financial Covid-19 relief to other states that had been hard hit by the virus.

Mr Perrottet, who previously referred to Mr McGowan as “the Gollum of Australian politics” in an interview about GST revenue, wrote in the most recent budget passed while he was Treasurer that the allocation of the money was “inequitable and unfair to other states”.

In 2018, the Morrison government introduced a floor of 75 cents per person per dollar of GST to ensure no state would be “worse off” under the system, after WA’s share of GST fell to almost 30 cents per person per dollar after a mining boom.

WA’s record budget surplus has deepened a rift with other states after NSW and Victoria lashed WA’s special deal with the federal government to extract GST compensation payments.

Mr Perrottet has declared he is ready for a showdown with WA over the issue.

The new NSW Premier Dominic Perrottet has said he won’t back down on GST revenue. (Photo by Brook Mitchell/Getty Images)

WA Premier Mark McGowan has vowed a “fight to the death”. (Photo by Will Russell/Getty Images)

The disagreement between WA and other states has been brewing since the Commonwealth government introduced the funding floor in 2018.

The NSW government argues that as a result of the rules, WA is getting too much money from GST revenue compared to what the state contributes, especially because the state’s finances are buoyed by booming iron ore prices.

Before the changes passed, NSW successfully lobbied for a clause to be inserted that said no state would be worse off than before.

Dominic Perrottet helped lobby for the “no worse off” clause. (Photo by Brook Mitchell/Getty Images)

It requires the Commonwealth to reimburse states for any revenue lost due to the rule changes until the 2026/2027 financial year.

Mr Perrottet has previously said the clause saved NSW $2 billion over three years.

Asked about his GST stance going forward, Mr Perrottet said: “The most important thing on it GST is that the federal government does not remove the ‘no worse off’ clause.”

“If that no worse off clause is removed, it will have a heavy burden, a very heavy burden in supporting other states.

“WA particularly needs to come to be table and get a deal that is fair for the country.”

However, Scott Morrison said he would not be willing to renegotiate the deal.

“The deal is done. It’s not something I’m revisiting,” he told Perth radio station 6PR.