Western Australia's premier has warned other states against launching a raid on its share of GST revenue, declaring WA carries the nation's economy.
Liberal governments in NSW and South Australia have both complained about taking a major GST hit in this month's federal budget because of the COVID-19 pandemic.
NSW estimates it could lose more than $6 billion over the next four years, while South Australia's revenue has taken a $1.3 billion write-down in 2020/21.
WA, which forecast a $1.2 billion budget surplus this month, is set to cash in on $1.5 billion in commonwealth top-up payments this financial year under GST reforms negotiated in 2018 which ensure the state receives at least 70 cents to the dollar.
The state's mining royalty revenue also ensures it is less dependent upon GST collection than other states.
But delivering the keynote address at the Diggers and Dealers mining conference in Kalgoorlie, Labor Premier Mark McGowan warned WA would fiercely resist any attempt to revise the GST carve-up.
"While I expect some of them are unhappy about it, obviously trying to unwind that now would invoke a pretty serious fracture between the states and the Commonwealth, particularly Western Australia," Mr McGowan told the conference.
"We will not tolerate anything of that nature.
"NSW complains a lot and they get about 95 cents for every dollar they put in ... Western Australia still subsidises the rest of the nation under the GST deal even as it is currently constructed."
Driven by a resurgent iron ore price, WA's finances are forecast to remain in the black over the next four years.
Chinese demand for steel has remained a huge driver of WA's economic fortunes amid growing tensions between Canberra and Beijing.
Mr McGowan urged state and federal leaders against being reckless with trading relationships that "fund the nation".
"Australia needs to have a good relationship with China," he said.
"It is not beyond us as Australians to do that. In these difficult and uncertain times it is essential to keep trade relationships strong rather than letting them fall because of disputes."