Federal Treasurer Scott Morrison has threatened state and territory governments with cutting their share of GST revenue should they limit gas exploration.
The Australian on Wednesday reports that Mr Morrison has warned the Productivity Commission would include states' responses to natural resources in its inquiry into the GST.
"The Productivity Commission is looking at whether the way the states and territories operate is giving them a leave pass under the GST formula for not getting on and doing things," he said.
"When you have states that get on and do things, should they be penalised by getting less GST?"
South Australia and Queensland are the only two states or territories currently without some form of limit on fracking or other gas exploration.
Mr Morrison will be in Perth on Thursday where is likely to come under pressure from the McGowan government again on the GST carve-up.
The McGowan government's submission to the productivity commission is to share revenue on a per-capita basis, which would give Western Australia an extra $10 billion.
West Australian governments have long felt the state has been dudded by the GST distribution. It gets only 33 cents for every dollar generated.
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