The Economy, Stupid WA’s Special Deal: Fair Reward or Billion‑Dollar Rort?
Feb 26, 2026
Matt McKenzie, economics writer who defends WA’s case for fairer GST treatment. Saul Eslake, former chief economist turned fiscal federalism expert. They debate why WA got a special billion‑dollar boost, the history and purpose of GST redistribution, whether resource success should reduce support, and what reforming the grants system might look like.
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How Australia's Grants Commission Was Born
- The Grants Commission was created after a 1933 secession vote to equalise state service standards by assessing need and revenue capacity.
- It calculates how much each state could raise at average tax rates and how much they need to spend to give citizens comparable services.
Wexit Prompted Federal Redistribution
- The Grants Commission was prompted by a near-unanimous 1933 Wexit vote in Western Australia demanding better federal support.
- That secession threat pushed Canberra to create a formal redistribution mechanism.
The 2018 GST Workaround That Blew Out Costs
- A 2018 workaround reweighted GST so Western Australia kept a much larger share as its mining royalties surged, reducing its payments to other states.
- The ad hoc fix now costs around $60 billion over 11 years versus $9 billion initially estimated.