The Productivity Commission's interim report, published on 14 August 2026, reviews Australia’s system for sharing GST revenue between the States and includes a number of proposed changes.
Some of these proposed changes could affect households, businesses and communities across Western Australia, as well as the broader Australian economy.
Within the interim report, there were a number of claims made about the GST reforms and whether its working as intended. Read more context on the implication of these claims and what changes could mean for Western Australia.
Key claims from the interim report
1. The reforms have “only” left WA better off.
This is not the case.
Every State has benefited from higher iron ore revenue since the reforms were put in place, with around 90% redistributed to other States via the GST.
In fact, other States are expected to receive $34 billion in additional GST over 2020-21 to 2029-30 as a result of higher than expected iron ore prices.
Furthermore, WA has re-invested almost $23 billion of its higher GST collections into additional economic infrastructure and initiatives, including investments into our ports, roads, water and power infrastructure and strategic industrial areas that will facilitate further economy activity.
Independent modelling by ACIL Allen suggests that this will grow the national economy by up to an additional $68 billion over the next 20 years, as well as generating significant additional revenue for the nation.
2. The reforms cost the Australian Government much more than expected.
The cost of the reforms has been higher than anticipated due to increased mining revenue generated in WA, particularly as a result of higher iron ore prices.
This has increased the cost of the no worse off guarantee payments for the Commonwealth as it underwrites the pass through of this benefit to other States.
However, the cost to the Commonwealth is far outweighed by additional company tax collections, which are typically three to four times the cost of the reforms.
The company tax revenue generates approximately 4.2 times more benefit to the nation than the increased cost of the no worse off guarantee.
3. The reforms reduce the degree of Horizontal Fiscal Equalisation achieved in Australia.
Horizontal Fiscal Equalisation is the process used to distribute GST revenue between states and territories so they can provide a similar standard of government services.
The GST system unfairly punishes WA for growing its economy, in particular its mining industry. The reforms assist to rectify this.
As WA's resources sector grows, including industries such as iron ore and lithium, around 90% of the additional mining revenue generated is redistributed to other States through the GST system.
No other State experiences such a high degree of redistribution. For example, Queensland only has around 40% of coal royalties redistributed to other States.
Even with the reforms, WA still provides around $2 billion a year to other states through the GST system. Without the reforms, that amount would be more than $8 billion.
The PC's interim report seeks to unwind this balance.
4. The reforms introduced perverse outcomes to the GST system.
On the contrary, the 2018 GST Reforms fixed unintended and perverse outcomes in the underlying GST system.
The underlying GST system resulted in WA effectively retaining only around 10% of mining revenue for commodities like iron ore and lithium, with the rest redistributed to other States.
In contrast, other States retain 100% of their gambling revenues, meaning they keep around $6 billion generated from pokies without any redistribution to other States – effectively encouraging States to promote gambling instead of developing other forms of revenue.
The reforms reduce this disincentive and ensure WA can retain more of the benefits from growing its economy.
