Rita Saffioti’s warning to other states: if you come for our GST, we’ll fight to keep iron ore out of it

WA is boldly asking to keep some iron ore royalties out of the GST formula, as Rita Saffioti tries to head off an attack from other states that want a bigger share of WA’s profits. The Cook Government has put its case to the Productivity Commission, which is reviewing the 2018 deal that guaranteed every state would get at least 75 cents back for every dollar raised. The submission, obtained by The West Australian, argues “in the strongest possible terms” that the GST floor “must” be preserved. But it also included a plan B that’s likely to fuel the fight with other states. “Given that the PC has sought views on possible alternative arrangements, we recommend that consideration be given to a 25 per cent discount on the (Commonwealth Grant Commission’s) mining revenue,” WA’s submission argues. Ms Saffioti wants both. “We’re arguing for the 2018 reforms and the 25 per cent discount,” she said. The Treasurer says that would reduce the impact of high iron ore prices and so reduce Commonwealth top-ups for other states that reached almost $5 billion in 2025-26. “Canada’s got a 50 per cent discount, and 25 per cent is more of a moderate path, and is what the mining companies are suggesting,” she said. The idea of a discount for mining royalties has been rejected by the Productivity Commission previously, on the basis that it would “herald calls for other carve-outs”. WA’s Treasurer argues other states are already benefiting from the total carve-out of poker machine revenue. And she used that example to hit back at Tasmanian MP Andrew Wilkie’s submission, after he said WA’s “puerile bleating” should be ignored and “unfair largesse” clawed back. “It’s disappointing but it’s ironic,” Ms Saffioti said. “For a person that hates pokies, he’s happy for Tasmania to keep their pokie revenue. I mean, that’s just hypocrisy.” She was more diplomatic about South Australia’s submission, that claimed it has suffered an underlying “opportunity cost” of $500 million, and called for a return to full horizontal fiscal equalisation - that saw WA’s share of GST fall as low as 30 per cent in 2016. It would be even lower today. Ms Saffioti accused South Australia’s Treasurer and Premier Peter Malinauskas of “harping”, less than a month before that state goes to the polls. “They believe they should receive all of our money,” Ms Saffioti said. “I mean, this is the reality, South Australia believes that they should receive more money from Western Australians, and so does Tasmania, and so does everyone else. “Look, I understand the concept of self interest when it comes to state treasurers. I understand that, but I really can’t believe any treasurer could sit there and say it’s fair for Western Australian to get 18 per cent of what they put into GST.” The maths in WA’s submission attempts to dispel claims that the Commonwealth’s no-worse off guarantee for other states has become too expensive. “The NWOG would not have cost more than initially forecast if iron ore prices had not been higher than initially forecast,” the submission paper argues. “And the revenue benefit to the Commonwealth from higher iron ore prices has far outweighed the increased cost of the NWOG.” By three to four times, it says. Plus, Ms Saffioti argues, WA gets less Commonwealth money through other grants. “And I point to one road. It’s a 10 kilometre road in South Australia that cost $15 billion and they’re getting over $7 billion from the Commonwealth,” she said. The GST pie has increased from $64.5 billion in 2018-19 to an estimated $95 billion this year. During the same time period, WA royalties have tipped a further $39 billion into the Commonwealth’s coffers while getting less back. “Tasmania gets $1400 per person for regionality, compared to Western Australia that gets $230 per person for regionality, when our state’s 37 times as big,” Ms Saffioti said. “The system’s grossly unfair and broken.” She said Western Australia now gives much more than it used to take from Commonwealth funding arrangements, before iron ore boomed. WA Treasury estimates the cumulative loss since 1942 amounts to $32 billion. Anthony Albanese has repeatedly promised there will be “no change” to WA’s GST deal and signed his pledge in ink on a reporter’s arm in 2024. Ms Saffioti has vowed to hold him to that, whatever the result of the Productivity Commission’s report in August.