Productivity Commissioner declares ‘we are above politics’ after Albanese dismisses GST report condemning WA sweetheart deal
Dr Angela Jackson has defended the independence of the Productivity Commission after Anthony Albanese dismissed its GST findings, which revealed the 2018 reforms had cost $23 billion in six years and benefited only Western Australia.
Productivity Commissioner Dr Angela Jackson has responded to Prime Minister Anthony Albanese’s dismissal of a review into the GST carve-up, insisting the independent body’s job is to provide advice in the national interest, rather than serve the political interests of any government.
It comes after Mr Albanese thumbed his nose at the Productivity Commission over findings that 2018 GST distribution changes favoured the mining-rich state of Western Australia and imposed a massive cost on taxpayers.
Mr Albanese said the report was “commissioned by the Liberal Party” and the “Morrison government” and that he would not make any changes whatsoever to existing GST arrangements – after the Productivity Commission recommended ending WA’s sweetheart deal.
In response, Dr Jackson told News24.com.au that the Productivity Commission was “above politics” and would continue its rigorous review process – with its final report to be handed down by December 31.
“We are, in many respects, above politics and that’s our function,” Dr Jackson said on Tuesday.
“We provide, obviously, advice to government across a number of areas. We’re very used to our reports being hotly debated in the political realm, that’s part of our job as well – to inform that political debate.”
Dr Jackson herself was appointed to the Productivity Commission – which receives $41 million in taxpayer funding – by Labor Treasurer Jim Chalmers in 2025 for a five-year term.
She said the GST review was a legislated process stemming from the 2018 reforms implemented by the Morrison government and it was not simply a political exercise.
“This is actually a legislated review under the 2018 reforms where the Productivity Commission was asked to look at whether the reforms had met their intent, whether they were operating effectively or efficiently,” she said.
“What we found in the broad was that the reforms have, and there’s a lot of media around this, cost a lot more than anticipated. So when they were brought in, they were meant to cost around $5 billion. In the first six years, they’ve ended up costing $23 billion.”
Dr Jackson said the Productivity Commission also found the central objective of the reforms had not been achieved.
“Only Western Australia was better off as a result of the reforms, and we haven’t really found big increases in terms of reform incentives across the system,” she said.
“And so what we’ve found was the reforms really have led to a system that’s far less equal in terms its primary objective and less efficient and costing a lot more than anticipated.
“So fundamentally it’s costing obviously the Commonwealth government around an extra $6 to $7 billion per year.
“Now there’s a question around of course what the opportunity cost of that additional cost is. We sort of quantify it’s around a $450 a year tax cut.”
Jackson defends independence
Dr Jackson was asked directly about Mr Albanese’s decision to dismiss the report before it had been publicly released, after the Prime Minister argued it was an inquiry commissioned under Scott Morrison.
“Look, we have a process which is fairly rigorous at the Productivity Commission,” Dr Jackson said.
“When we first get terms of reference from the government, we open up for submissions and we received over 60, including from all states and territories.
“We met this time with every State Treasurer, we met with departmental officials on a number of occasions through the inquiry.”
She said the commission had prepared an interim report with draft recommendations specifically to allow governments and other interested parties to respond before the final report was completed.
“We then formulate and draft an interim report with draft recommendations. Now we do that to get feedback, to hear from people, different views. For them to point out where they think maybe we haven’t fully appreciated their arguments and we’ll be holding public inquiries mid-September.”
Asked what effect the Prime Minister’s dismissal of the report could have on the final findings, she said the commission’s process would remain unchanged.
“Well from our perspective it won’t change anything in terms of that process,” she said.
“As I said we are independent of government, it’s a really important feature of our economic infrastructure as a country and as an institution.”
Dr Jackson said the Commission would report to the government by the end of the year, with the final report to be made public 25 sitting days after it was delivered to Treasurer Jim Chalmers.
“It will be there for the public record in terms of our analysis and our assessment of these policy issues,” she said.
PM stands by broken system
Despite the Productivity Commission’s conclusive findings, Mr Albanese on Monday made clear he has no intention of adopting its recommendations.
Speaking in WA he sought to shift responsibility for the review onto the former Coalition government, pointing out that the inquiry was commissioned under Scott Morrison.
“This is an interim report commissioned by the Liberal Party, commissioned by the Morrison Government, not commissioned by us,” Mr Albanese said.
“When you commission the Productivity Commission, you shouldn’t be surprised that you get the sort of economic rationalist view of the world coming out.”
It’s an extraordinary position for a government which convened an “Economic Reform Roundtable” 12 months ago in order to consider how to “improve productivity”.
Mr Albanese said the Productivity Commission would deliver its final report later this year, but insisted the outcome would not change his position.
“What I believe is very clearly, there will be no change to WA’s GST arrangements whilst I’m Prime Minister,” he said.
“WA is a major driver of our national economy and they deserve their fair share of the GST.”
Mr Albanese’s staunch defence of the WA deal coincides with the fact the Labor Party has 11 of the 16 federal seats and 46 of 59 state lower house seats.
“I will always back WA. I am in sync with the Premier of WA, and I can’t be clearer about that. No change to WA’s share of the GST,” he said.
How does the system work?
The Goods and Services Tax is collected by the federal government and then distributed to the states and territories.
The federal government is meant to parcel out the money to the states so they can deliver equivalent services across education, health and policing.
However, the distribution arrangements were changed in 2018, at a time when WA was key to the federal election.
The state was given more money than it would have otherwise received based on fairness, effectively creating an unfair system.
While WA earns extra cash from resources booms, the federal government still has to top it up with federal funds, despite it not needing as much money as other states.
Because the GST pool is fixed, whenever one state benefits, another state loses, and WA has surged $47 billion ahead of other states since 2018.
Economists slam ‘disaster deal’
Prominent economists have long condemned the WA GST deal which has been variously described as a “disaster”, “broken” and a “prisoners’ dilemma”.
Leading economist Saul Eslake recently welcomed the Productivity Commission’s findings, arguing they vindicate years of criticism of the WA GST arrangement.
Mr Eslake has described the 2018 deal as the “worst public policy decision of the 21st century thus far”, saying it has cost taxpayers significantly.
He has pointed to the $6.4 billion cost of the reforms in 2024-25, arguing that money could have funded a tax cut of more than $450 for every taxpayer.
Mr Eslake has said he cannot understand how a Labor government could regard handing “$60 billion over 11 years to the richest state in the country” as fair.
“Nor do I understand how that can be considered consistent with ‘prudent management’ of the nation’s finances,” Mr Eslake said.
Fellow independent economist Chris Richardson also backed the Productivity Commission, saying politicians were ignoring the obvious fix.
“As the Productivity Commission points out, we’d have done better to stick with what we were already doing (pre-2018),” he said.
“But reactions to the PC report to date tell … that the fix is in – all the politicians know what’s right, and they’re ignoring that.
“Instead, they’re circling the wagons to protect a dirty deal. They’re doing so to avoid losing votes.
“A handful of journalists are fighting the good fight, but most of the media is just shrugging off the sight of the largest single bribe delivered to marginal electorates that Australia has ever seen.”
States pile pressure on Canberra
The commission’s findings have intensified pressure from the eastern states, with NSW Treasurer Daniel Mookhey describing the deal as an “expensive failure”.
He has argued all Australians should receive comparable government services regardless of which state they live in.
Queensland Treasurer David Janetzki has called the current system unfair, while South Australian Treasurer Tom Koutsantonis labelled the GST arrangement “a dog of a deal”.
Western Australia has strongly rejected the report, with Premier Roger Cook attacking its critics and defending the state’s entitlement to the additional GST funding.
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