WA asked for grant cuts: Swan

The Rudd Government will press on with changes to the Commonwealth Grants Commission that will cost WA taxpayers $223 million, arguing that is what the Barnett Government wants.

Treasurer Wayne Swan said as his WA counterpart Troy Buswell had urged the Government to support changes to the way $45 billion in GST was carved up among the States and Territories there was nothing Canberra could do.

It follows the commission's latest report that will actually reduce payments to WA by $223 million in the 2010-11 financial year to just 7.1 per cent of the total available.

While changes sought by WA actually boosted the amount available to the State by $450 million, this was more than offset by the commission's decision to cut the overall allocation because of strong revenue opportunities and growth in areas such as mining and land tax.

Premier Colin Barnett attacked the arrangement, saying the State was being penalised by Prime Minister Kevin Rudd.

But Mr Swan said as both WA and Queensland had sought the changes, which were delivered, the Federal Government would not be intervening.

"I note that it has been the longstanding practice of governments of both political persuasions to adopt the advice of the CGC, given its role as the independent authority on these issues," he said.

"I note the comments of the WA Treasurer and Queensland Treasurer last week, calling for the full implementation of the methodology review."

But WA Liberal Senator Mathias Cormann linked the grants commission's decision with other tax moves by the Rudd Government.

He said the benefits that WA delivered to the rest of the nation were being ignored by the Government more intent on looking after east coast States.

"The Rudd Government is the most Eastern States centric Federal government we have ever had," he said. "They have targeted WA through tax hikes like the $2.5 billion additional tax on our North-West Shelf, they are looking at extending the resources rent tax across all our resources and have not delivered on the flow-through shares scheme they promised."