Two years ago, the prime minister cheerfully took a Sharpie proffered by a West Australian journalist to sign a paper pledge to retain the state's GST deal. (AAP: Richard Wainwright)<\/p>\n
A permanent marker is, by design, very difficult to erase, but a damning new report suggests Anthony Albanese is going to have to give it a crack.<\/p>\n
Two years ago, the prime minister cheerfully took a Sharpie proffered by a West Australian journalist to sign a paper pledge to retain the state's GST deal.<\/p>\n
For good measure he then grabbed the reporter's arm and scrawled "no change to WA GST" \u2014 even suggesting the signature would make a nice tattoo.<\/p>\n
Now, the Productivity Commission has given Albanese plenty of reasons to reconsider reaching for that pen.<\/p>\n
Its interim review delivered a brutal assessment of the GST deal struck by the former Coalition government in 2018 and enthusiastically inherited by Labor.<\/p>\n
Those changes guaranteed states a minimum GST share, while Canberra agreed to compensate states left worse off than under the previous system.<\/p>\n
In practice, the commission has found one state has been left significantly better off: Western Australia.<\/p>\n
A permanent marker is, by design, very difficult to erase, but a damning new report suggests Anthony Albanese is going to have to give it a crack. (AAP: Richard Wainwright)<\/p>\n
Every other jurisdiction has required "no worse off" payments since the new standard took effect, and that has come at a considerable price.<\/p>\n
The reforms were expected to cost the Commonwealth about $5 billion by 2024-25 but have instead soared to almost $23 billion.<\/p>\n
And money is only part of the commission's objection.<\/p>\n
The GST system exists to smooth out the differences between states so Australians can receive broadly comparable public services regardless of where they live.<\/p>\n
But the commission found the 2018 changes had weakened that principle without delivering sufficient improvements elsewhere.<\/p>\n
Its preferred prescription is dramatic: unwind the central architecture of the deal, move back towards the pre-2018 system and deal directly with the particular distortion caused by WA's dominance of mining revenues.<\/p>\n