A federal Labor government would create a $1.6 billion infrastructure fund to partially offset Western Australia's massive shortfall in GST revenue.

Opposition Leader Bill Shorten made the pledge when he addressed Labor's State conference in Perth, as the Federal Labor party makes its pitch to WA voters to deal with the state's depressed share of GST revenue.

But at $1.6 billion, the new fund to be created in 2019 falls well short of the $10 billion predicted to flow from McGowan Government's proposal to reform the way GST revenue is distributed to the states.

Mr McGowan wants the revenue shared on a per capita basis, which he forecasts would increase WA's GST revenue by $10 billion.

Mr Shorten gave no commitment to changing the system.

Mark McGowan and Bill Shorten during the Labor State Conference. ( ABC News: Andrew O'Connor )

Questioned by reporters earlier this week, Mr Shorten declined to give any specifics on how or if a federal Labor government would reform the distribution of GST to the states.

Instead, Mr Shorten announced a $1.6 billion infrastructure fund that would compensate WA for its GST shortfall in 2019.

WA currently receives 34.4 cents for every dollar of GST raised in the state.

The GST revenue is expected to reach 60 cents in the dollar by 2019, and Mr Shorten said the additional $1.6 billion would effectively lift the state's revenues to the equivalent of 70 cents in the dollar.

No change to GST formula

Liberal Prime Minister Malcolm Turnbull last year vowed to set a minimum level for WA's GST share, but has yet to offer any specific plan or timeline for delivering a so-called GST floor.

In a statement, Mr Shorten said while Mr Turnbull had acknowledged the problem, Labor had developed a real solution for WA.

"This is the first serious solution to Western Australia's Commonwealth funding disparity," Mr Shorten said.

"It is the result of the advocacy of federal Labor's WA representatives in Canberra, and months of productive discussions between federal Labor and WA Labor."

But Mr Shorten acknowledged the infrastructure fund, which would be enshrined in legislation and known as the "Fair Share for WA Fund", does not address the fundamental problems in the existing GST system.

"This funding is above and beyond existing Commonwealth funding, and will be exempted from future Commonwealth Grants Commission assessments," he said.

"This policy does not change the current GST formula.

"We will consider the Productivity Commission review findings, but we are ending the cross-country argument over winners and losers, and ensuring every state gets the support they deserve."

'Big first step': Premier

Premier Mark McGowan insisted the top-up payment would be ongoing and would legislate a 70 cents in the dollar floor for WA.

Mr McGowan says the $1.6 billion is a good first step. ( ABC News: Andrew O'Connor )

"It's a 70 cent floor in the dollar legislated, so we will not go below that amount in the future," he said.

Mr McGowan said he would still like an 80 cent floor, or a per capita distribution, which would have delivered $10 billion extra to WA.

"I'm happy with this as a big first step," he said.

"Obviously, I'd like there to be over time more, and I call on Mr Turnbull to take action now and not in two years' time."

'Not the solution to GST': Nahan

But State Opposition Leader and former Liberal treasurer Mike Nahan said the Shorten proposal would do nothing to solve the problems with the GST system.

He it would be simply a different form of top-up payment, similar to payments already made by successive federal Liberal governments.

Dr Nahan says the Shorten plan would not solve the GST problem for WA. ( ABC News: Eliza Laschon )

"Conservative governments have given $1.2 billion in top-up payments and undoubtedly would continue to do that and that's all this is," he said.

Dr Nahan said federal Labor would only be handing back a fraction of the money it plans to raise from higher taxes.

"It doesn't affect GST distribution at all. What it does is take from one hand and give to the other," Dr Nahan said.

"Bill Shorten is committed to a very large increase in taxes and he's going to give a portion of that back to Western Australians and he's claiming this is the solution for a GST. It isn't.

"This $1.6 billion which he'll put into a fund will come from additional monies raised from West Australians in the form of higher taxes, particularly negative gearing and changes to trusts, and therefore actually just giving back some additional tax money raised which has nothing to do with the compensation of GST or reform of GST."

WA Chamber of Commerce and Industry of Western Australia chief economist Rick Newnham welcomed the $1.6 billion but said a permanent GST floor of 70 cents in the dollar should be enacted.

"We need to have a bigger conversation which now puts the focus back on to Malcolm Turnbull as to whether he will match the $1.6 billion and then put in a floor so that WA's GST share doesn't fall after that," he said.

