GST raised to 12 per cent with every additional dollar going to the states, distribution switched to where the money was spent, and horizontal fiscal equalisation abolished. A quarter of the Resource Extraction Levy to the state the production came from — $12.6 billion a year to Western Australia, including a share of its own offshore gas for the first time.
States deliver hospitals, schools, police, and roads on 45% of government revenue. Starved of funds, they lean on payroll tax, stamp duty, and land tax — bad taxes that punish growth — while the Commonwealth holds the income tax and GST levers. Vertical fiscal imbalance is the single biggest structural problem in Australian government funding, and no major party has been willing to fix it for thirty years.
GST at 10% is the lowest rate in the developed world. Horizontal Fiscal Equalisation distribution penalised WA at less than 30 cents per dollar for a decade. The formula rewards need, punishes productivity, and is renegotiated annually around political pressure rather than principles. Both the rate and the distribution are broken.
Resources are charged eight different ways across the states and territories, plus the Commonwealth offshore. Each has its own Act, rates, valuation rules and regulator. A company operating in three states runs three compliance systems to pay for the same thing, and every rate change is a separate political fight in a separate parliament. The complexity is not a by-product. It is the reason nothing moves.
The rate rises from 10 to 12 per cent, and every additional dollar goes to the states. Fresh food and prescription medicine stay exempt, and utilities become newly exempt — electricity, gas and water from licensed providers — which is the answer to the regressivity objection. Consumption above $100,000 in a single transaction is surcharged. The net gain to the pool is approximately $10 billion a year, taking it from $95.1 billion to $105.1 billion.
The distribution formula is replaced with a single rule: GST returns to the state where it was spent. Horizontal fiscal equalisation and the Grants Commission's role as distributor are abolished. No commission, no relativity assessment, no annual fight.
Both revenue streams then follow the same principle — money returns to where it was generated, by arithmetic rather than assessment. The levy follows production. The GST follows consumption.
This is also what ends the royalty penalty. Under equalisation a state that raises royalties is assessed as having greater fiscal capacity and its GST share falls to match — which is why rates have barely moved in decades while commodity prices moved several hundred per cent. Remove the clawback and a state can charge properly for its own resources without being punished for it.
The Resource Extraction Levy is collected once by the Commonwealth and divided by a formula fixed in legislation: 73 per cent Commonwealth, 25 per cent to the state the production came out of, 2 per cent to Traditional Owners. No annual negotiation, no state-by-state deals. A state receives a quarter of the levy raised on its own ground — not a national pool divided by need.
Nationally the levy raises approximately $103.7 billion a year, of which $25.9 billion goes to the states and territories and $2.07 billion to Traditional Owners. Offshore is treated the same as onshore: the state component follows the adjacent area the field sits in, so a state receives a share of the petroleum off its own coast for the first time.
Western Australia sold $220 billion of minerals and petroleum in 2024–25 and collected $10.6 billion in royalties and related grants — and roughly $1.1 billion of that is North West Shelf grants paid by the Commonwealth, not royalty the state levied.
Under the levy, Western Australian ground carries approximately $50.3 billion. The state's 25 per cent share is $12.6 billion — an increase of about 19 per cent on what it collects today, on a base that no longer collapses when the iron ore price falls. A further $1.0 billion goes to Traditional Owners in a state that currently has no statutory royalty share at all.
The largest single change is gas. Western Australia sells about $49 billion of LNG, oil, condensate and LPG a year and receives almost no royalty on it, because the fields sit in Commonwealth waters. Under the levy that production is charged on the same rule as everything else, and the state gets a share of it.
With the GST reform below, Western Australia's net position improves by approximately $3.0 billion a year. The full Western Australian numbers →
Native title does not include minerals. They remain Crown property everywhere in Australia, including on native title land and on Aboriginal freehold. Whatever a Traditional Owner group receives, it is not received as owner of the resource.
Two of eight jurisdictions direct any part of the royalty to Traditional Owners, and one of those does it by agreement rather than statute. In the Northern Territory, royalty equivalents from mining on Aboriginal land are credited to the Aboriginals Benefit Account. In South Australia, the state pays the Aboriginal Lands Trust up to two-thirds of royalties from Trust land, by agreement. Everywhere else the share is zero.
Western Australia is the sharpest case. It has no statutory Aboriginal land rights regime and no statutory royalty share — the only state in that position, and the one with the largest royalty base in the country.
The Native Title Act gives a right to negotiate over tenement grants, and two features of it govern every negotiation. If the process fails and goes to arbitration, the National Native Title Tribunal is expressly barred from awarding a payment based on the value or volume of what is extracted. And the negotiation is usually funded by the mining company.
A group that cannot be awarded a royalty and cannot fund its own case has one source of leverage left: time. The delay that frustrates industry is not obstruction. It is the designed output of a system that removed every other lever.
Two per cent of the levy, legislated, paid automatically — approximately $2.07 billion a year nationally and about $1.0 billion in Western Australia, in a state where the statutory share is currently nil. It is paid as a share of public royalty to a defined beneficiary class, on the same architecture as the Future Fund. It is not government taking custody of private money. The full design is at platform §2.8, the Traditional Owner Services Fund.
The money is no longer what must be fought for project by project with time as the only weapon. Heritage protection, site consultation and the right to refuse access to significant country are unchanged and strengthened, and existing agreements are honoured in full.
Statutory quarantine — the fund can only be spent on defined services. A mandatory annual distribution floor, so money cannot accumulate: the Aboriginals Benefit Account credited $426 million in 2018–19 and paid out $208 million, and unspent receipts under this fund auto-allocate by formula. Full publication by community on the People’s Portal, every dollar in and out — the current system’s central failure is that nobody can see the money, least of all the communities. And custody separated from allocation: the Commonwealth holds, invests and audits; a board with a Traditional Owner-elected majority decides where it goes.
That last rule is the one that answers the obvious objection. A Commonwealth-administered fund is exactly what the Aboriginals Benefit Account is, and its documented failure is accumulation while communities go without. Federal custody and federal audit are defensible. Federal decisions about what communities receive is where it becomes paternalism.
Australia currently charges for its resources through eight separate state and territory regimes plus the Commonwealth, each with its own Act, its own rates, its own valuation rules, its own definitions and its own regulator. A company operating in three states runs three compliance systems to pay for the same thing.
The levy replaces all of them with one law, one published rate schedule, one valuation rule, one regulator, one payment. It is adopted by each state and territory on the national electricity law model — drafted once, applied by each jurisdiction — so it needs no referendum and no state surrenders its revenue. The rate schedule is set in primary legislation and published annually in dollar terms, so a project can model thirty years of it on the day it starts.
The second half of the simplification is the approval process. A project sits on approved geology and unapproved access, sometimes for years, while the same information is assessed by different agencies against different tests.
Under this system: a standard track of three months and a complex track of six, the longer track invoked only by the regulator with published written reasons. No third track. No extensions. A self-funding regulator resourced to meet the clock, and deemed approval if the clock expires — the delay becomes the regulator's problem rather than the proponent's.
Because certainty is worth more than a low rate that can move. Sovereign and regulatory risk is priced into every project's cost of capital, and a higher known charge can beat a lower uncertain one on the company's own numbers. The trade is explicit: a higher rate, in exchange for one rulebook, one payment, a published formula and a clock that runs.
A state keeps a quarter of what its own ground produces, receives a share of the petroleum off its own coast for the first time, and stops losing GST for charging properly. It also stops carrying the political fight with industry alone, because the rate is national and no single premier is the one who raised it.
| Current — Broken Federation | Sovereign Australia — Working Federation |
|---|---|
| GST at 10 per cent, the lowest in the developed world. | 12 per cent, with every additional dollar to the states. Fresh food, medicine and utilities exempt. |
| Distribution set by horizontal fiscal equalisation and renegotiated annually around political pressure. | GST returns to the state where it was spent. HFE and the Grants Commission’s distributor role abolished. |
| A state that raises royalties loses GST share, so no state raises them. | The clawback is gone. A state can charge properly for its own resources. |
| Royalty rates set eight different ways, changed by regulation, argued over every budget. | One national levy, one published schedule in primary legislation, 25 per cent to the state the production came from. |
| Offshore petroleum returns the adjacent state almost nothing. | Offshore charged on the same rule, with the state share following the adjacent area. |
| Traditional Owners have a statutory royalty share in two jurisdictions out of eight. | 2 per cent legislated nationally, paid automatically. |
| Approvals run for years across multiple agencies against different tests. | Three months standard, six for complex, and deemed approval if the regulator misses the clock. |
| Western Australia collects $10.6b on $220b of its own resources. | $12.6b to the state, $1.0b to Traditional Owners, and about $3.0b better off once the GST reform is counted. |
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Memo 4 — Setting The Rate. The levy design in full — the base, the marginal bands, the trigger, the schedule commodity by commodity, the 73/25/2 split and the Western Australian numbers. With sources.
Memo 3 — What Australia Charges For Its Resources. What every jurisdiction charges for its resources today, what it collects, where the money goes, and why no state raises its rates. With sources.