The Federal Government will give Western Australian an extra $499 million in funding for road projects to make up for the large fall in the state’s share of GST revenue.
The cash injection comes after last month’s fiery Council of Australian Governments meeting, where WA Premier Colin Barnett said the state was being crippled by falling iron ore prices.
In terms of GST revenue, Western Australia is allocated just 38 cents in the dollar, while states like New South Wales receive 98 cents in the dollar.
Speaking in Perth on Wednesday, Mr Abbott acknowledged the state had fallen on hard times.
“This is a Commonwealth government which stands by the states in their times of difficulty and this has been a rare and difficult moment for Western Australia,” Mr Abbott said.
“Western Australia has not for nothing been known as ‘the golden west’ for some time, but this is a difficult time for Western Australia, and that’s why the Commonwealth government is standing by them.”
The cash will go towards a series of jointly-funded road projects, including those on the Mitchell Freeway, Kwinana Freeway, NorthLink WA, Reid Highway, Roe Highway, Great Eastern Highway and at the Aubin Grove Train Station.
According to the ABC, the decision is expected to placate the WA Liberals who are grappling with a dramatic collapse in mining royalties and are unhappy that their GST share will fall further to 30 cents in the dollar next financial year.
The report alleges the move is likely to infuriate other states however, who claim WA has wasted its resources boom and neglected the hard work required to bring its budget under control.
Mr Barnett thanked Mr Abbott for the funding which he said would get the state through “a very difficult period”.
“I’ve been complaining about this over several years and finally a prime minister has listened and acted.”
“We’ll still have a state budget deficit, but it will be significantly less than it would be.”
Tensions boiled over at the COAG meeting last month when Mr Barnett failed to convince other premiers the GST distribution needed to be changed.
He accused other states of “ganging up” on Western Australia, but academics have said Mr Barnett has no one else to blame but himself for mismanaging funds during the mining boom.