Treasurer Scott Morrison insists Western Australia's low share of the GST carve-up is not his doing, saying he understands the state's frustration but will not intervene.
The latest distribution by the Commonwealth Grants Commission revealed WA would get only 34.4 cents in the dollar in 2017/18, up from a record low of 30 cents.
The WA Treasury had been counting on 38 cents next financial year and the lower-than-expected allocation, which represents just $2.354 billion out of a $62.74 billion national pool, has further dented the state's already bleak financial outlook.
The commission says on its website it makes recommendations to the federal government, but in 2016 chairman Greg Smith said the treasurer was ultimately responsible for determining the allocations.
But Mr Morrison has rejected WA's calls for him to act, even while acknowledging the distribution formula had produced unforeseen outcomes.
"You can't engage in an arbitrary process for how this is done. It's distributed on the basis of a formula which is set by the Commonwealth Grants Commission," he told 6PR radio on Friday.
Mr Morrison said West Australians had made valid points, including the state effectively being penalised for growing its resources sector while some other states left commodities in the ground and their gambling revenue was not factored into the GST dole-out.
Unlike states such as NSW, there are only a few pokie machines in WA and they are restricted to Crown Casino, with both Labor and Liberal parties opposed to allowing them outside that complex.
"You make an excellent point in that this has to be looked at from the perspective of the national interest, whether that's economic growth or the impact of social policies," Mr Morrison said.
But the commission did not consider policies, he said.
"They just simply look at an average person in Australia and how much, potentially, on average would be raised from one person on such revenues if they were to have them," Mr Morrison said.
The commission still deems WA as having the strongest fiscal capacity of the states and territories.
But Premier Mark McGowan on Thursday described the state's finances as "the worst since the Great Depression" as Under Treasurer Michael Barnes revealed net debt was forecast to peak at a record $42.3 billion by 2019/20, up from $41.1 billion.
Commonwealth Bank research released on Friday forecasts easing prices for iron ore this year, but export volumes of the steelmaking commodity and also LNG from WA continue to lift.
The bank estimates WA is about 90 per cent of the way through the downturn in mining investment.
But consumer spending remains weak, land tax collections are falling and the unemployment rate is rising.
The new Labor state government has warned its first budget in September will be grim, flagging a wage freeze for public servants, while households have been told to expect increases to fees and charges of at least the magnitude assumed in last year's budget.
Share
