The GST distribution dispute is an ongoing political controversy concerning the distribution of goods and services tax (GST) revenue amongst the Australian states and territories and the federal government. The dispute was originally based upon Western Australia's (WA) dissatisfaction with its low returns, which led to reform in 2018. The 2018 reform guarantees all states and territories a minimum return on their contribution.
As a result of WA's improved financial position during and after the COVID-19 pandemic, debate has since centred around the suitability of the minimum payments floor introduced and the perceived inequity of the reform. Currently, the federal government provides a "no worse-off guarantee", meaning that states and territories receive either the funding they would have under the old system or the new system, whichever is higher. This prevents the reform causing disadvantage to any jurisdiction during the transition period, which will expire in 2029–30. Several states have held inquiries and have alternatively demanded the federal government undo the reform or continue contributing to the GST pool. The Commonwealth Grants Commission, which is responsible for calculating the GST shares paid to each state and territory, is scheduled to review the GST scheme twice by 2027.
Critics have pointed to the high cost the federal government incurs subsidising states under the no worse-off guarantee and the relative inequity in funding that the reform introduced. Alternative proposals have been made to suggest the use of a per capita distribution system. Supporters of the reform contest that WA can not be expected to indefinitely subsidise other states, that undoing the reform would disincentivize WA from developing its natural resources, and that gambling taxes (which are a major source of revenue in the eastern states) should be included in the distribution calculation just as mining royalties are. The reforms continue to be supported by both the Coalition and the Labor Party at a federal level, and both have campaigned on their support for the reform. Despite the criticism and proposed alternatives, it is generally understood that altering the distribution arrangements would be political suicide due to WA's status as the key swing state in federal elections.