The Federal Defence Minister has used his address to the West Australian Liberals conference in Perth to criticise the GST distribution system, labelling it a "scandal".

WA Senator David Johnston told delegates he was outraged the state's "hard-earned" dollars were going to other states.

"The outrage of the numbers and the destination of our hard-earned revenue to other states and territories is a scandal that only we really understand and are prepared to fight for," he said.

Earlier, Premier Colin Barnett reiterated his criticism of the system.

He told party members WA was losing $3.7 billion a year while propping up other states such as Tasmania, which he said struggled due to its own problems.

Mr Barnett said the state's money was also going to "fat cats" in Canberra.

He urged the Federal Government to take financial responsibility for the Northern Territory and the ACT "like it used to".

"The rules around the rate of the GST and what items are included does require the approval of every state and territory," Mr Barnett said.

"But the distribution, the sharing of the $50 billion between the states, is the responsibility of the Federal Treasurer.

"So my argument is not with the other states, it is with the Commonwealth Government and the Federal Treasurer.

"The GST has now degenerated into a Commonwealth tax on Western Australia; we lose $3.7 billion a year... $500 million to Tasmania, $750 million goes from here to South Australia, but incredibly $600 million to Queensland and $140 million to Canberra itself.

Colin Barnett says Tasmania gets too much GST revenue. ( ABC News: Rebecca Trigger )

"The system is fundamentally broken and it is critical for the efficient operation of the Australian federation and today I made it clear: this is a tax on Western Australia."

South Australian Premier Jay Weatherill says his state does not need or want Mr Barnett's sympathy.

"What we need is a system of GST distribution based on the principle of one Australia - which means that wherever you live in this country you can expect a similar level of basic services," he said.

"Your standard of living in Australia should not depend on you living near a big mine."

Tasmania to fiercely oppose changes to distribution: Hodgman

Tasmanian Premier Will Hodgman said WA should not make fixing its budget his state's problem.

"It's a bit rich coming from a state that has previously been a net-beneficiary of the GST, but is now experiencing a downturn in revenue," he said.

"We will fiercely oppose any changes to horizontal fiscal equalisation and suggest those with short memories in Western Australia recognise that what goes around comes around."

Outside the Liberal conference, the Mr Barnett was asked whether his federal colleagues, such as WA senator Mathias Cormann, should be fighting harder for change.

"Absolutely they should, and as I said in the conference, it would be an embarrassment for the Liberal party if Clive Palmer and the Palmer United Party took up this issue, because after all they did campaign on it in the WA senate election," he said.

Last week WA treasurer Mike Nahan urged business and government to stop investing in Tasmania's north-west.

"It's better to put a $1 investment in Karratha than north-west Tasmania," he said.