The overwhelming majority of royalties generated by WA’s booming lithium projects seem destined to prop up the Eastern States, with the Commonwealth Grants Commission confirming it has no plans to exclude the sector from the GST carve-up.

With support from both sides of politics, WA’s lithium industry has sprung from a single mine a few years ago to a pipeline of mines and processing facilities worth billions.

In his recent State Budget, WA Treasurer Ben Wyatt projected lithium royalties would grow from $89 million this financial year, before another $333 million flows to the State between next year and 2022.

Mr Wyatt wrote to Federal Treasurer Scott Morrison shortly after WA’s Budget was handed down on May 9, asking him to direct the CGC to exclude lithium royalties from its calculations as a reward for the State’s quick reaction to help support booming demand for the commodity.

Responding to questions from WA Labor senator Louise Pratt in Senate estimates hearings last week, CGC secretary Michael Wilcock confirmed the CGC had no plans to exclude the new industry from future GST carve-up calculations as the industry grows.

“The commission does not operate on the basis of what might be, it operates on the basis of reported royalties,” he said.

Mr Morrison’s office confirmed it had received a request two weeks ago from the State Government to exclude the emerging industry but Mr Wilcock said the CGC had not received any directions from Mr Morrison’s office regarding the booming commodity.

Mr Wyatt said WA should not be punished for expanding its resources sector, and WA taxpayers should get the full benefit of royalties from new mines.

Senator Pratt said she was surprised to learn the CGC had not been asked to examine the impact of excluding lithium from future GST decisions.

“If the Turnbull Government was serious about addressing WA’s GST problem it would have referred the issue to the CGC to consider,” she said.