The federal government's refusal to enter into a new National Partnership Agreement on Remote Indigenous Housing threatens to damage the relationship between Western Australia and Commonwealth, the state's Housing Minister Peter Tinley says.
The 10-year agreement expires on Saturday and a war-of-words between Mr Tinley and Indigenous Affairs Minister Nigel Scullion escalated as the week progressed.
Senator Scullion accused him and Aboriginal Affairs Minister Ben Wyatt of a "dummy spit" when they complained about the end of the deal and labelled the Commonwealth's offer of $60 million over the next three years inadequate.
The WA government also said Senator Scullion threatened not to pay the final, $43 million payment under the old agreement.
But he told AAP on Friday it would be provided "to deliver certainty to remote Indigenous communities in WA".
An exasperated Mr Tinley said the cash had "being held up as a ransom note" and described the $60 million offer as an "exit payment".
He said Senator Scullion was committed to his portfolio but had "simply been rolled by the federal cabinet", and was mystified as to why the Commonwealth had a "philosophical position" against helping vulnerable communities, not just in WA but in Queensland.
He made the comments while announcing a $245,000 advertising campaign with the aim of persuading Prime Minister Malcolm Turnbull to step in.
"We are at our wits end here. We don't do these things lightly," Mr Tinley said.
"We're getting a breakdown of federation ... this is actually the sort of thing that breaks down relationships with the Commonwealth government because they don't see that they need to support all Australians.
"We're past sitting down and having a chat, when you have a philosophical blockage like you do at the federal level."
Without federal help, it would be very difficult for the debt-laden state to maintain standards in remote WA, and build 1300 houses the federal government acknowledges needs to be built to avoid overcrowding, Mr Tinley said.
"We cannot do this alone - we don't have the capacity to do it."
But Senator Scullion suggested WA use Special Purpose Payments for social housing as well as the National Partnership on Homelessness to pay for remote indigenous communities.
WA Aboriginal Advisory Council chair Ian Trust urged the federal and state governments to work together to find a solution.
