Western Australia's Rita Saffioti stands alone in defending the Morrison-era GST deal, which is the subject of a highly anticipated report by the Productivity Commission circulated to federal, state and territory treasurers ahead of their meeting on Friday.
The interim report, which will be made public after the meeting, is the first milestone in the commission's legislated review into the 2018 reforms.
The deal, which Tasmanian economist Saul Eslake labelled the "worst public policy decision of the 21st century thus far", is set to cost federal taxpayers $60 billion by the end of the decade.
Instead of distributing GST to the states based entirely on need - a principle called horizontal fiscal equalisation that has existed since federation - the new system ensures resource-rich WA receives no less GST per person than the fiscally stronger of NSW or Victoria.
To ensure that no other states are worse off, the federal budget will contribute top-up payments to the tune of $6.6 billion in 2026/27.
The other states argue the new distribution method disproportionately benefits WA, which is swimming in a $2.4 billion budget surplus as a result of the higher federal payment.
"NSW believes the objectives of the 2018 legislative changes have not been achieved and that the current system of distribution is overly complex and increasingly unfair," the state government said in a submission to the inquiry.
But Ms Saffioti said the eastern states viewed WA as a "cash cow".
"It was the Productivity Commission that said the previous system was broken," she said in a statement.
"If they backflip, they would lose all credibility."
While the GST deal is likely to dominate the meeting, the agenda will also cover a $400 million federal injection to boost productivity in the trucking industry by eliminating paperwork and increasing road access for electric trucks.
The Albanese government will also seek agreement on a deal to pay the states $60 million to remove barriers preventing nurses from prescribing and administering medicines.
Together, the measures could boost GDP by up to $5.6 billion annually, Treasurer Jim Chalmers says.
The federal government will also provide an update on its work to streamline the National Construction Code (NCC), which opposition housing spokesman Andrew Bragg on Wednesday pledged to slash from 2000 pages to less than 90.
Labor has already paused new changes to the code, which the building industry says is overly complex.
"Our work to streamline the NCC and deliver greater national consistency is a significant microeconomic reform opportunity," a spokesperson for Housing Minister Clare O'Neil said.
The government's final report into the modernisation of the code will be presented to building ministers later in 2026.
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