The review, commissioned to assess the long-term impacts of the 2018 GST distribution overhaul, reportedly found that the deal has cost the federal budget an estimated $60 billion in foregone revenue or misallocated funds.
The 2018 agreement was designed to address complaints from Western Australia, which had been receiving a lower share of GST revenue due to its mining boom. Under the deal, the Commonwealth guaranteed that no state would be worse off under a new formula, effectively creating a floor for payments and a top-up mechanism paid for by the federal government.
Supporters of the deal argue it provided certainty and fairness, particularly for resource-rich states that had long argued the previous system penalised their success. However, economists and state treasuries from the more populous eastern states have consistently criticised the arrangement as unsustainable and inequitable.
The independent report's conclusions appear to vindicate that view, but efforts to publicise the findings have been met with a determined campaign to discredit them. According to Shane Wright, the economics correspondent who broke the story, opponents are 'smothering those findings in a nauseating level of bulldust.'
While the report's authors have not commented publicly, sources indicate that the methodology is robust and that the $60 billion figure reflects the cumulative cost of the no-worse-off guarantees over a decade.
The federal treasurer has not yet responded to requests for comment, but previous statements from the government have defended the deal as necessary for national unity and to ensure all states could provide essential services. Meanwhile, state premiers from New South Wales and Victoria are likely to seize on the report to renew calls for reform.
The timing is politically sensitive, with states preparing their budgets and federal negotiations over the next intergovernmental agreement on federal financial relations expected to begin later this year.