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Anyone who knows Saul Eslake will tell you the respected economist is anything but a hothead.

Likely to have forgotten more about the Australian economy and the state of the budget than most observers know in the first place, Eslake perfectly sums up the former Coalition government’s 2018 GST deal with Western Australia.

The deal, expected to hand an estimated extra $60bn in tax revenue to the state over a decade, amounts to “the worst public policy decision of the 21st century thus far”, he says.

“Any rational person would also draw from that fact alone that the current arrangements are not fiscally sustainable for the commonwealth.”

A long-awaited review of the arrangements by the Productivity Commission has made similar findings: that the split represents a costly mistake that should be reversed as quickly as possible.

Released by the federal government on Friday afternoon, the report says the GST arrangements made the carve up of more than $100bn in revenue among the states and territories less equitable and had achieved none of its objectives.

Already costing some $23bn to 2024-25, the dud deal is set to cost as much as $60bn by the end of decade.

To summarise: it is less fair, shockingly expensive and not working anyway.

The Productivity Commission found Western Australia was the only state benefiting from the changes Scott Morrison introduced as treasurer, warning they undermined “harmonious and productive federal financial relations”.

Alex Robson, the deputy chair of the commission, said the deal had “reshaped a system that needed targeted reform, leaving taxpayers with a large and growing bill”.

“The system should be brought back to its core purpose: ensuring that all states and territories are able to offer Australians a similar standard of services and infrastructure no matter where they live.”

GST rules may not be sexy, but they are fundamental to the effective operation of federal and state budgets.

When things work as intended, states and territories receive a greater or smaller share of revenue from the tax on a per person basis, depending on the fiscal capacity in their budgets, in an annual assessment by the independent Commonwealth Grants Commission.

Prompted by a collapse in revenue for Western Australia because of the end of the decade-long mining boom, Morrison created new top-up payments and a “no worse off” guarantee, designed to ensure no state could receive a lower per-person share than New South Wales or Victoria.

Angela Jackson, one of the report’s authors, even went as far as to point out perverse outcomes created by the politicised arrangements. A better fiscal position in Western Australia won’t cost the state any revenue, but South Australia or another state improving the standing of its budget would drive down its share of GST dollars.

It shouldn’t be much of a surprise that the report’s recommendations will be political non-starters in Canberra and Perth. Labor and the Coalition have tripped over themselves to repeatedly endorse the deal, recognition that the government’s political standing in the west would be shattered by any serious change.

In 2024 Labor extended the transitional arrangements – originally due to expire in 2026-27 – to 2029-30.

Ahead of the last election, Anthony Albanese strangely signed his commitment to never change the deal on the arm of a Perth journalist. Labor targeted then opposition leader Peter Dutton over the deal in TV ads during the election campaign, despite him also having voiced clear support for the arrangements and promising not to change them.

Albanese was asked about GST on Friday morning in Canberra. He said Western Australia was a driver of the national economy and deserved “a fair deal”. But, distancing himself as much as possible, he pointed out the Morrison government had initiated the Productivity Commission review, not Labor.

A final report is expected before the end of the year.

“I assure Western Australians of this,” Albanese said. “You will get your fair share because your work and what you contribute to the national economy really counts.”

If Labor isn’t prepared to make a sensible structural change with 94 lower house seats – including holding 11 of WA’s 16 electorates – and up against an opposition seemingly determined to plumb new lows in opinion polls, when will it ever do the right thing?

The West Australian premier, Roger Cook, savaged the report in a press conference after its release. He called the commission’s assessment “dodgy, deceitful” and “dumb”, and sought urgent assurances from Albanese there would be no action from Canberra.

This is despite a run of eight WA budget surpluses, boosted by mining royalty windfalls and the generous GST revenue to the state.

Cook should apologise for maligning serious work by serious public servants in what can only be described as parochial grandstanding.

“The changes would punish Western Australia for its success simply to prop up other lazy states,” the premier said, even as the NSW premier, Chris Minns, and the Queensland treasurer, David Janetzki, urged the report’s recommendations be taken up in full.

Minns likened Western Australia to Saudi Arabia and the United Arab Emirates, digging up natural resources and splashing money around the world for a life of luxury.

Not to be outdone, Coalition frontbencher Michaelia Cash alleged – without any evidence – that Albanese and the treasurer, Jim Chalmers, “can’t be trusted with WA’s GST”.

Politicians distorting the usual grants process for political gain do a disservice to voters everywhere, not just in the states that lose out from an unfair share of the GST. The only thing worse than the party corrupting the system to benefit its own interests is the other party backing in the changes to avoid hurting its own chances.

The party that promises to return integrity to the GST carve-up should be rewarded by voters for correcting the worst public policy decision of the century.