The GST top-up guarantee was designed in 2017-18 by...

The GST top-up guarantee was designed in 2017-18 by then-treasurer Scott Morrison and the Productivity Commission to compensate all states and territories for the GST revenue they lost as part of a deal to put a floor under the tax allocation for WA, which was constantly complaining it was being dudded.

Under the change, no state can receive less than 70¢ in the dollar from GST raised in their states. That will rise to 75¢ next year.

It was designed to improve WA’s share, which sat at about 30¢ because of the big royalties it received from its minerals.

Higher-than-forecast iron ore prices since the deal was crunched and, to a lesser extent, higher-than-forecast volumes, meant keeping WA at no worse than 70¢ has cost the other states far more revenue than expected.

More so after Treasurer Jim Chalmers extended the top-ups for another three years, from 2027-28 to 2029-30 last year, to enlist the support of the states to help cut the cost of the National Disability Insurance Scheme.

The top-up payments were originally forecast to cost $8.95 billion over the 10 years to 2028-29.

Last week, former WA premier Colin Barnett, who exerted the pressure that forced the deal, admitted it was bad policy.

He suggested it be torn up. Instead, 90 per cent of the GST revenue should be allocated on a per capita basis with the other 10 per cent allocated under a formula similar to the existing model, he said.