The federal government won't guarantee Tasmania and South Australia will be no worse off under potential changes to the way GST revenue is carved up among the states.
"You're getting way ahead of yourself," Finance Minister Mathias Cormann told ABC radio on Monday, after the Turnbull government ordered a revenue into the distribution of the consumption tax.
"We have initiated a Productivity Commission review and we obviously can't pre-empt what the findings and recommendations of that review will be."
Tasmanian Premier Will Hodgman has vowed to fight tooth and nail against any changes to the GST, declaring his state deserves its fair share.
Senator Cormann says the federal government has long acknowledged Western Australia's slice of GST revenues is unacceptably low, and top-up payments offered to Perth in recent years have been a short-term fix.
"We always were of the view there is a need for medium to long-term reform," he said.
The minister said one way forward was setting a floor, below which state GST splits cannot fall, but refused to nominate a specific threshold.
The productivity commission has also been directed to examine the three-year lag in GST calculations.
"It is true that WA has been hit with the perfect storm where it was still effectively penalised ... for very high prices for its iron ore exports in particular some years back," Senator Cormann said.
"When of course the royalty revenue from iron ore exports and production has significantly fallen at present."
It was clearly in the national interest to investigate what impact splitting the $60 billion among the states was having on productivity and growth.
"We want to ensure that all states have the right incentives to grow and develop their economy and to pursue budget reforms both on the spending and the revenue sides of their budget," Senator Cormann said.
Share
