Proposed changes to the GST carve-up by the body that oversees the system have been stopped dead in their tracks by the Federal Treasurer amid concerns they could have left WA hundreds of millions of dollars worse off.
Josh Frydenberg this week wrote to the Commonwealth Grants Commission saying he would be changing the terms of reference for a review of the formula that determines how much GST revenue each State receives.
In a copy of the letter obtained by Seven West Media, Mr Frydenberg tells the commission he will be ruling off limits any changes to the way mining royalties are assessed.
The development comes after WA Treasurer Ben Wyatt this week warned the State was at risk of missing out on more than $200 million a year as a result of changes flagged by the CGC.
Under those changes, the CGC would have treated iron ore royalties in the same way as those for coal, which are higher, and would therefore assume WA had a greater capacity to raise revenue.
Mr Frydenberg said that while he appreciated the “considerable work already undertaken” by the commission, it was vital the review reflected the spirit of the GST-fix laws recently passed by Federal Parliament.