The new West Australian Government has been handed a major budget blow, with the state set to be hundreds of millions of dollars worse off due to a lower than expected GST allocation.

Treasurer Ben Wyatt admitted it would be virtually impossible to meet Labor's pre-election commitment of bringing the state budget back to surplus by 2019-20, following the revised figures from the Commonwealth Grants Commission.

WA had been expecting to get 38 cents out of every GST dollar raised in the state in 2017-18, but that has now been revised down to 34 cents.

While the 34 cent figure is an improvement on the 30 cents WA receives for 2016-17, it is still a substantial write down on Treasury's expectations.

The Grants Commission explained the allocation by saying WA "remains the state with the strongest fiscal capacity".

That will leave the already cash-strapped government $241 million worse off in 2017-18 and cost the state $738 million in revenue over the next four years.

WA's position 'beyond a joke': Wyatt

Ben Wyatt says it will now be "very difficult" for WA to record a surplus in 2019-20. ( ABC News: Andrew O'Connor )

WA Treasury had been expecting the state budget to be $1.5 billion in the red next year, but the decision means that deficit is now likely to be even higher.

Mr Wyatt described the situation as "beyond a joke".

He accused the Prime Minister of showing an "abrogation of leadership" on the issue.

"This makes it very difficult to return to surplus in [2019-20] and it does create more urgency in finding recurrent savings in WA," Mr Wyatt said.

"I am horrified and furious that the Grants Commission could still think that Western Australia, in the fourth year of what is effectively a domestic recession ... has the strongest fiscal capacity of all the states.

Mr Wyatt said he had already requested a top-up payment from the Commonwealth of $226 million to make up for the low GST share.

Scott Morrison said agreement on GST reform among states and territories remained an issue. ( ABC News: Matt Roberts )

Federal Treasurer Scott Morrison said he would consider WA's request for additional funds, but downplayed the prospect of GST distribution reform being on the horizon.

"I'm yet to see any commonality on that point across the states and territories and that is always going to be an issue," Mr Morrison.

Mr McGowan raised the GST issue in his meeting with Mr Turnbull, which ran significantly over time but was described as "very productive".

"The time for action is now, waiting for years into the future is not the right approach," Mr McGowan said prior to the meeting.

"He needs to make sure Western Australia isn't treated like the poor cousin that it is today."

Despite having a much larger population than both Tasmania and the Northern Territory, WA's GST distribution will again be lower than those two jurisdictions in dollar terms.

Queensland's population is less than double WA's, yet it will receive around six times as much GST revenue.

WA will get $2.35 billion in GST revenue in 2016-17, just 3.7 per cent of the total pool.

Conditions for floor not expected in next four years

The decision is certain to increase pressure on the Federal Government to reform the GST distribution system, with Opposition Leader Mike Nahan saying he wants both major parties at a state level to intensely lobby their federal counterparts.

Six months ago, Malcolm Turnbull promised to implement a floor level that no state's share of GST revenue could fall below.

But he has since admitted his Government will not act on that until WA's share improves to around 70 cents in the dollar under the current system, something which is not projected to happen at any point in the next four years.

Mike Nahan says it's now Ben Wyatt's turn to come up with solutions to WA's GST problem. ( ABC News: Andrew O'Connor )

Dr Nahan said there was a fundamental problem with the GST, and he was willing to work with Labor as "team WA" to try to fix it.

But he also challenged the WA Government over what was, until recently, his problem.

"Ben Wyatt is in the seat I occupied not too long ago ... and basically said it was a no hoper, well he's got the task now," Dr Nahan said.

"They ridiculed, indeed undermined, every attempt we made to solve this issue. Now they're in Government, it's their mandate to come up with ideas."

Federal Liberal Senator Dean Smith said the GST system was "terminally diseased" and impacting the quality of life of all West Australians, as he urged his Government to act immediately.

"The sentiment in Western Australia is one of anger, the GST system requires a wholesale revision," Senator Smith said.

"People are crying out for reform of the GST system."