The Premier Colin Barnett has admitted that the State Government knew it would receive less GST funding as a result of raising royalty rates in last week's budget.

The State Government announced it will increase royalty rates for most of Western Australia's iron ore exports, resulting in an extra $2 billion of revenue.

Mr Barnett has long been calling for more GST funding but acknowledges that will drop as a result of the budget decision.

"We know if we get more mining royalty income under the current arrangement, our GST falls, we do know that," he said.

He has also criticised the Federal Government for its aggressive approach.

"To roll out Ministers on the weekend, they looked like tin soldiers with pop guns, I don't know what they're doing but I am not in a stoush with the Commonwealth Government," he said.

Last week, the Federal Resources Minister, Martin Ferguson, said it was a bad move.

"Western Australia is very likely to end up losing more in GST revenue than it gains in additional royalties," he said.

"In many ways Colin Barnett says 'I'm going to take what I can when I can from the resources sector'; in essence, to hell with the consequences over time to the

broader Western Australian economy."

GST revenue is administered by the Commonwealth Grants Commission, an independent agency.

Mr Ferguson says that by increasing state royalties, WA is sending the commission a message that it has enough revenue from other sources and does not need as great a slice of revenue from the GST.

The Federal Member for Perth, Stephen Smith, says Mr Barnett was well aware

WA could end up with GST being cut.

"When a state premier does that, he does it with his eyes open and he knows that there are bound to be consequences," he said.

WA Labor Senator Chris Evans accused Mr Barnett of being hypocritical because he was a vocal opponent of the Federal Government's plans to impose a Minerals Resource Rent Tax.

"The current tantrums quite frankly do him no credit," he said.

"This Federal Government is absolutely committed to supporting infrastructure in Western Australia but you cannot have it both ways, you can't double dip."

The State Government will have to change the Mining Act and its State Agreements with BHP Billiton and Rio Tinto.