Western Australian Premier Colin Barnett has attacked his fellow state premiers for locking in a system of GST distribution that "penalises success and rewards failure" after emerging from the latest Council of Australian Governments meeting.
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At a joint media conference following the COAG meeting on Friday, premiers and chief ministers one after the other praised the meeting as a constructive and collegial gathering that had achieved progress on the creation of a national domestic violence order scheme, counter-terrorism and tackling the use of the drug ice.
But in his statement Mr Barnett brought an immediate end to the bonhomie, saying, "Well, I must have been at a different meeting."
The WA government is pushing for reform because its share of GST revenue - currently 38¢ for every dollar of GST collected in the state - is set to fall even further to less than 30¢ in the dollar. The state also faces declining royalties because of plummeting iron ore prices.
"I've got to say I was disappointed in my state colleagues," Mr Barnett said. "They had an opportunity to show some willingness to actually achieve some reform and it wasn't there, so I don't know how we're going to reform Australia and modernise it when we can't tackle an issue which is so inequitable and also has the effect of penalising success and rewarding weakness or failure."
Mr Barnett said the current GST arrangements were "highly destabilising".
"The Grants Commission [which allocates GST revenue] dates from the 1930s," he said. "It was meant to provide equality and stability to finances here in Australia. It's exacerbating the cyclical swings. It's dysfunctional, its time is up."
Mr Barnett praised Mr Abbott for recognising that WA was being treated unfairly.
Other state premiers said it was important not to tinker with the independent distribution process.
Prime Minister Tony Abbott said there would be a special COAG leaders retreat later this year, without officials, to discuss fundamental reform of the Australian federation.
"I'm very conscious of the fact that for the next 12 months or so, Australia has an election-free zone and that should give us an unusual window of opportunity for significant structural reform if we are prepared to grasp that nettle," Mr Abbott said.
Premiers and chief ministers agreed to implement a national domestic violence order scheme that applies across state and territory governments. Mr Abbott said he hoped this would come into effect within 12 months.
Following the COAG meeting on Friday Mr Abbott also flagged that his government may water down $80 billion worth of reductions to school and education funding following heated criticism from state premiers.
The government announced in last year's budget that it aimed to achieve $80 billion in savings over 10 years by changing funding arrangements for schools and hospitals.
But Mr Abbott indicated that the federal government may reconsider the scale of funding reductions - particularly for healh.
"What we want to try to do collectively in the next six months in particular is to work out whether it is possible to do things on a more efficient and effective basis, to reconsider who does what and how, to try to ensure that we don't have the health funding crunch that many people fear right now.
"The important thing is to try to avoid that."
