Architect of current GST system says it is 'working exactly as intended'

Former Finance Minister Mathias Cormann has vigorously defended the 2018 GST overhaul, asserting the system is “working exactly as intended” despite a scathing interim report from the Productivity Commission. The architect of the current floor mechanism maintains that the arrangement remains a vital tool for national economic stability, even as the nation’s fiscal watchdog labels the distribution both costly and inefficient for the Commonwealth.

The controversy follows findings from the Productivity Commission suggesting the current carve-up has created a multi-billion dollar pressure point on the federal budget, primarily benefiting Western Australia at the expense of other jurisdictions. While the eastern states argue for an immediate return to the traditional fiscal equalisation model, Cormann insists that the reforms were necessary to prevent a total breakdown in the fair distribution of revenue across the Federation.

“What we are witnessing is the inevitable friction between regional sovereignty and federal fiscal responsibility, a balance that is as delicate as it is essential for the nation’s future.”

As Treasurer Jim Chalmers navigates the fallout of the report, the political pressure continues to mount ahead of the final findings due later this year. With the “no-worse-off” clause set to expire in 2026, the battle over the GST remains one of the most divisive issues in Australian politics, pitting state against state in a high-stakes scramble for the national revenue pool.