A fresh political fight over the GST has erupted as the issue is dragged through the South Australian election campaign, with Labor accusing the Federal Government of backing away from an overhaul of the system.

SA Federal Cabinet ministers Christopher Pyne and Simon Birmingham yesterday pledged to fight any changes that left their State worse off, with Mr Pyne dismissing a draft Productivity Commission proposal that would give WA a better deal.

“The Productivity Commission writes reports, the Government makes policy,” Mr Pyne said. “There is no policy to change the GST mix.”

Senator Birmingham, the Education Minister, said: “Right now there’s nothing for people to fight over.”

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But he left open the possibility of changes if his State received extra financial assistance.

“What we do is something that might be discussed, depending on what the Productivity Commission says in their final report,” Senator Birmingham said.

“But I can assure you that South Australian Federal Liberal MPs will look out for South Australia’s interests.”

Federal shadow energy minister Mark Butler said Labor’s policy on the GST was “clear”, having committed to a $1.6 billion infrastructure fund to compensate WA for its dwindling share of the GST.

The Opposition’s leadership team has ruled out supporting any change to the distribution formula, despite Federal WA Labor MPs saying the fund is a “first step” and that broader reform to fix the GST distribution formula would be welcome.

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“We will oppose any change to the arrangements around the distribution of the GST,” Mr Butler said.

WA Treasurer Ben Wyatt accused the Liberal Party of “rolling over on GST reform”, noting that Curtin MP and deputy Liberal leader Julie Bishop had emphasised the Commonwealth would not advantage one State over another, and that former premier Colin Barnett had branded the approach of Federal MPs “pathetic” in separate weekend radio interviews.

Mr Wyatt, who had backed the Productivity Commission’s review as a pathway to reform, appeared to switch support to Federal Labor’s plan for the $1.6 billion, one-off payment to WA.

“Malcolm Turnbull has said there is zero cash on the table,” he said. “Christopher Pyne has confirmed there is zero policy and Julie Bishop has shown there is zero appetite to fight for change.

“The McGowan Government is committed to real reform for the GST, but as it stands we have a $1.6 billion payment to the State on offer from the Federal Labor Opposition and that, as State Treasurer, looks far more appealing than a plan which appears in hasty retreat from the Federal Government and some hollow rhetoric from WA Cabinet members.”

SA and Tasmanian Labor senators moved a motion in the Senate yesterday condemning the Government for its handling of the Productivity Commission report, which has been delayed until after elections in those States next month and the Federal Budget in May.

The motion said that under changes to the distribution of GST revenue, Tasmania would lose $168 million in the first year and SA $557 million. Under this scenario, WA would receive at least an extra $3.2 billion.