Productivity Commission to examine $60 billion cost blowout

In accordance with Morrison’s policy, when it was expected to cost $ 2.3 billion for four years, no state’s GST share cannot fall below 75 ¢ for each dollar of the tax and the Federal Government has filled the national GST pool. At that time, the WA’s share fell below 30 ¢ every dollar estimated to be gathered in the state.

Federal taxpayers are estimated to have a cost of approximately $ 2.3 billion for four years. Instead, it will cost more than $ 60 billion by 2029.

According to the reference conditions, the commission is required to determine whether the regulation is “financially sustainable for federal and state governments, whether the system has an incentive to follow reforms in areas such as tax and service provision and whether it provides certainty to states for budget planning.

In addition, during the last election to honor the original Morrison agreement, they take into account the promises of the federal government, while the commission requires the feasibility and risks of any change.

The GST agreement grew faster than all other federal programs, including NDIS. But it is also a great political issue for the government and the coalition.

In 2018, the agreement was largely demonstrated by the open political pressure in the WA, where the coalition defended 11 of the state’s 16 seats. In the 2025 elections, Labor kept only four with the liberal party.

In addition to the pressure on the budget, other states are aimed at both the agreement and the change of GST.

The long -term critic of the independent economist and Morrison agreement, Saul Eslake, said that the investigation would be a test for the Albanian government and whether it will continue to “give” the country’s richest state with 7 billion dollars a year.

Considering the large explosion of the commission in costs, the commission should find that the agreement should not work as intended.

“Any rational person will also benefit from this fact that the current regulations are not financially sustainable for the Nations community,” he said.

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“Hopefully, the Treasurer has opened the door to reversing the worst public policy decision of the 21st century today.”

NSW Treasurer Daniel Mochey said that the country would be better if the “captured” GST allocation system is corrected.

“Not to do anything means that Australia will be stuck with a strange system that no one can understand, and explain, much less support,” he said.

“The nation would be better if we change to distribute GST to the elimination and use the balance of the federal grants system to help smaller states.”

The WA Treasurer Rita Saffoti said he was sure that the investigation would not affect the current agreement, which he describes as “naked minimum for the state.

“It is about making sure that states are not punished for success and that states are given the ability to direct national economic consequences,” he said.

The main reason for the explosion in the GST agreement was the ongoing force in iron ore prices, which are supposed to have fallen to their long -term average. Instead, they continuously performed better than expectations.

In the March budget, it was assumed that the spot price of the iron ore fell to a ton of $ 60 until March next year. This year, so far, one ton is more than $ 100.

If this continues, it means that the cost of the GST agreement will explode again.

The first applications will be closed with an interim report until 28 August on 27 February. A final report must be presented to Chalmers by the end of next year.

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