Despite cashing in from high iron ore royalties, WA's share of the tax pool was increased in the independent Commonwealth Grants Commission's latest carve-up, released on Friday.
Queensland was the biggest winner in dollar terms, while NSW lost ground because of lower spending on natural disaster relief and strong growth in land values.
The distribution of GST has historically been decided based on need, which from about 2000 to 2018 meant resource-rich WA received a significantly lower per capita share than poorer states such as Tasmania.
But 2018 changes, struck after years of persistent protestations from Perth, meant that in the past two financial years, WA could receive no less than 75c to the dollar of what it would get based on a per capita distribution.
WA's floor increased to the equivalent of NSW's relativity in the 2026/27 carve-up, which came in at just under 82c.
That means the cost to federal taxpayers of topping up the pool of GST revenue to make sure no state or territory is worse off will rise from $6.1 billion to $6.6 billion in 2026/27.
When it was first announced, the changes were forecast to set the federal budget back $9 billion over eight years.
But independent economist Saul Eslake now expects the cost to the federal budget to exceed $60 billion over 11 years, making it the biggest-ever blowout in the cost of any single policy decision except the NDIS.
The Tasmanian calls it "Australia's worst public policy decision of the 21st century thus far".
NSW's GST relativity fell from 86c, driven by lower spending on natural disaster relief than it had previously estimated, and large COVID-19 pandemic expenses in 2021/22 dropping out of the three-year assessment period.Â
A higher stamp duty take from strong growth in land values gave NSW a greater bounty than other states, making it less needy in the eyes of the commission.
NSW acting treasurer Courtney Houssos hit out at the carve-up.
"The complex and opaque calculations used by the Commonwealth Grants Commission once again highlight a broken and unfair system in urgent need of reform,'' she said.
She called for GST to be distributed on a per capita basis, with the Commonwealth stepping in to support smaller states.
Queensland, the biggest loser of the previous year's carve-up, had its relative share increase from 85c to 87c, or $1.7 billion - the largest improvement of any state.
Falling coal prices reduced the state's royalty revenue, leading the grants commission to assess the Sunshine State needed a bigger leg up.
Commission chair Mike Callaghan said the distribution arrangements aimed to ensure all states could provide their residents with a broadly comparable standard of government services.
WA Treasurer Rita Saffioti said other states and the federal budget had been significantly better off since 2018 due to higher-than-expected company tax collections from WA, outweighing the cost of the deal.
"Without the 2018 GST reforms, we risk $6 billion being ripped from the WA economy every year, reducing our ability to invest in the critical economic enabling infrastructure that powers our state and the national economy," she said.
The federal government tends to accept the grants commission's recommendations without amendment.
A spokesperson for Treasurer Jim Chalmers said GST payments were increasing for all states and territories.
A Productivity Commission inquiry into the GST deal is due to release an interim report by August.
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