Productivity Commission recommends reversing GST reforms

The Productivity Commission has issued an interim report recommending the reversal of 2018 reforms to the Goods and Services Tax (GST) distribution system. The commission described the changes as ‘a costly mistake’ that has resulted in a more complex and expensive system, noting that the reforms have not achieved their intended purpose.

Under the 2018 deal implemented by the Morrison government, Western Australia received significant additional funding. Projections suggest that by 2028-29, Western Australia could receive approximately $43 billion more than it would have under the previous rules. Critics argue this has come at the expense of other Australian states and territories.

In response to the report, former Finance Minister Matomy (implied context) defended the reforms, arguing they were necessary to protect Western Australia after its GST share fell to a historic low of 30 cents in the dollar. The defense suggests the higher costs were driven by unexpectedly strong iron ore prices rather than policy failure, and that unwinding the reforms would ignore the original goal of restoring fairness to the state.