‘Voter backlash if you take our GST’, says WA Treasurer Rita Saffioti

Rita Saffioti has launched a staunch ­defence of the GST reforms that have pumped billions of extra ­dollars into the nation’s richest state while also taking aim at other ‘absurd’ federal funding ­arrangements she says short-change the west.

Rita Saffioti speaks at The Australian’s Bush Summit on Friday. Picture: Colin Murty

Western Australia Treasurer Rita Saffioti has launched a staunch ­defence of the GST reforms that have pumped billions of extra ­dollars into the nation’s richest state, while also taking aim at other “absurd” federal funding ­arrangements that she says short-change the west.

Speaking to The Australian ahead of her address to the Bush Summit in Port Hedland on Friday, Ms Saffioti said she would use the upcoming Productivity ­Commission review of the GST ­arrangement to advocate for not just an extension of the current settings, but also for WA to receive more from a variety of other federal funds.

States angry about WA’s improved share of GST revenues, such as Victoria and NSW, have been eyeing the Productivity Commission’s 2026 review as their chance to push hard to scrap the GST floor that has been in place since 2018.

The GST floor was put in place by then-treasurer Scott Morrison in Malcolm Turnbull’s government. The changes have guaranteed WA retains at least 70c of every dollar of GST revenue it ­generates, rising to at least 75c. WA’s share had previously fallen as low as 30c for every dollar raised and would have fallen to about 10c if the system had not changed.

Ms Saffioti, who previously warned that any federal party that tried to unwind the GST mechanism would face an electoral wipe-out in the west, said she would point the Productivity Commission’s review to other funding ­arrangements that she said needed rectifying. She said it “defied logic” that funding for national parks was provided on a per-capita basis, rather than calculated based on a state’s land area. “The reality is larger national parks, like the ones found in Western Australia, have far greater maintenance needs,” Ms Saffioti said. “But somewhere like Victoria, with a much larger population and smaller national parks, receives more funding.

Rita Saffioti at the summit in Port Hedland.

“I would hope in the 2026 ­review, the Productivity Commission (would) recommend allocating funding like they do for erosion and foreshores, which is correlated on the length of the beach that needs to be maintained, instead of the population. It’s just common sense.”

Ms Saffioti said she was ­“baffled” by the way states were funded for remoteness. She said Tasmania, which covered about 68,000 square kilometres compared with WA’s 2.6 million square kilometres, received $648m for remoteness in 2023-24 compared with $633m for WA.

“Western Australia is the only state with multiple remote areas, with many of them significantly further away from a major city in comparison to other states,” the Treasurer said.

Ms Saffioti said that while there were still some “significant improvements” that needed to be made to the methodology, the reforms were vital in addressing other historical inequities.

“I’ve always said that iron ore doesn’t just jump out of the ground and onto a truck – we had to pour billions of dollars into ­developing our mining industry, but this wasn’t recognised by the Commonwealth Grants Commission,” she said.

Ms Saffioti’s push for a greater share of other funding programs will further anger rival treasurers and economists critical of the GST deal.

WA receiving a greater GST share has coincided with a boom in iron ore prices, making WA the only state in Australia running consecutive operating surpluses. International credit rating agency S&P Global this week ­affirmed WA’s AAA credit rating, with WA the only Australian state or territory to enjoy the highest possible credit rating from both S&P Global and Moody’s Investors Service.

WA last year collected more than $11bn in royalties, driven primarily by iron ore exports out of the Pilbara. That compared with the $4.6bn in royalties collected by NSW, the $387m reaped by South Australia, and the paltry $140m in royalties that went into Victoria’s coffers.

While iron ore prices have cooled in recent months, the price remains above WA’s short and long-term estimates.

Victorian Treasurer Tim Pallas this year described the ­current GST arrangements as “a significant fiscal threat to ­Victoria” and said the floor introduced in 2018 meant WA’s contribution to the rest of the country was “limited”.

Independent economist Saul Eslake has described the GST floor as “the worst public policy decision of the 21st century”.

The furore over the GST ­arrangements has occurred at the same time as WA has taken on increased significance in the federal political arena.

The four extra WA seats that Labor won at the last election led the party to its best ever result in the west and were central to Anthony Albanese being able to govern in his own right. Labor won 77 seats at the election, requiring 76 for a majority.

The government’s ability to retain those WA seats will go a long way to determining whether it can remain in power.

Ms Saffioti’s address will open the Port Hedland instalment of the Bush Summit, with assistant minister to the Prime Minister, Patrick Gorman, and Hancock Prospecting chair Gina Rinehart also to speak at the event.