Both sides of West Australian politics hailed yesterday's GST report a win, believing the acknowledgement of a flawed system might finally lead to the changes the state desperately wants.

Treasurer Ben Wyatt labelled the Productivity Commission's draft report on the GST system "very encouraging", while the State Liberals termed it "an important step in achieving real reform".

But WA politicians and punters alike might want to hold off popping the celebratory champagne corks for awhile yet.

For those who have not been paying attention, the Productivity Commission is examining the system used to distribute GST revenue — a model which sees billions of dollars raised in WA each year sent to other states.

Its draft report did deliver some findings WA was delighted to hear, yet also gave ample reason for caution.

On the positive side of things, the report acknowledged substantial problems with the existing system and admitted change was needed.

It posed suggested alternatives, including one — dubbed "equalisation to the average" — which would have left WA $3.6 billion better off this financial year.

However, any joy WA politicians took from those findings must be tempered significantly for a few key reasons.

Firstly, the report was just a draft, and the final version released next year could look very different.

Furthermore, any eventual change to the GST distribution model is not expected to come for years.

Some proposals WA made to change the system were flatly rejected, and the state's financial management was also strongly criticised.

GST change comes with political risk

Treasurer Scott Morrison ordered the GST distribution review in April. ( AAP: Lukas Coch )

But perhaps the most important point is that the Federal Government is not obliged to follow through on any recommendations and faces significant political risk if it does.

Prime Minister Malcolm Turnbull and Treasurer Scott Morrison have previously acknowledged the GST situation WA finds itself in is unfair.

But both major federal parties will inevitably balance fairness with political reality.

The aforementioned "equalisation to the average proposal" would be an enormous boon for WA, but would cost other states dearly.

For example, this financial year it would have cost Queensland $1.6 billion, Victoria $970 million and South Australia more than $500 million.

Other proposals, too, would have hit the bottom lines of other states hard.

That is something they will not accept lying down.

"If the Prime Minister accepts the Productivity Commission's recommendations there'll be a backlash across the country," South Australian Treasurer Tom Koutsantonis said.

"If he [Mr Turnbull] thinks he's in trouble now, he's in even more trouble after he makes those changes."

Change which benefits one state but hits all the others is a path few politicians would go down, especially with a federal election looming on the horizon.

After all, WA is home to just 16 of the 151 Lower House seats up for grabs at the next election.

Federal top ups an option, says Wyatt

Mr Wyatt said the Productivity Commission report proved WA's GST issues were real. ( ABC News: Jacob Kagi )

The Productivity Commission suggests minimising the pain for other states by waiting to implement change until WA's share improves significantly under the current system, which is likely a few years away.

But it is unlikely that would eliminate a backlash from other states, given their budgets would still be hit - just to a lesser degree.

Mr Wyatt suggested minimising the backlash from the rest of the country by having the Federal Government top up their budgets, to account for lost revenue.

"They alone have the capacity to ensure that other states are not penalised," the WA Treasurer said.

"I understand the political difficulties with other states, which is why the Federal Government needs to take a lead role."

But that would be an expensive option for the Federal Government, which is already running big budget deficits.

Mr Wyatt said the report should leave decision-makers across the country in no doubt that WA's GST complaints aren't a figment of the state's imagination.

But, after years of inaction and with plenty of roadblocks standing in the way, few would blame West Australians for not getting their hopes up just yet.