Tony Abbott has washed his hands of responsibility for fixing the GST distribution - and put himself at odds with his Treasurer and Finance Minister who favour Federal intervention.

The Prime Minister said though he had "considerable sympathy" for WA over its plummeting share of the GST, it "can't and shouldn't" be changed unless all States and Territories agree.

Mr Abbott's comments yesterday caused a shockwave of concern among WA Liberals, who thought they were on the brink of winning a major concession in their long campaign to get a more favourable GST split.

The Commonwealth Grants Commission has proposed slashing WA's GST share to below 30ï¿½ for every dollar generated in the State, down from 38Â¢ in the current financial year.

"What's happening is really quite unprecedented and I can understand Western Australia's concerns," Mr Abbott said.

"That said, the GST is a tax which is raised for the States to be spent by the States. It can't and shouldn't be touched without the consent of all the States and Territories.

"So, I hate to say this to the States and Territories but they really should sort this out.

"It's money that belongs collectively to them and collectively they should make a decision and being the grown-up adult governments that they are, that's what I expect them to do."

Premiers and chief ministers will gather in Canberra on Friday for the Council of Australian Governments meeting.

WA Liberal senator Chris Back rejected Mr Abbott's position, saying the Prime Minister's role in the Commonwealth was to show leadership.

"I am very much of the view that in a federation of States and Territories, the Prime Minister's leadership is pivotal, as expressed in the COAG process," Senator Back said.

He said it was in the interests of the other States to fund WA properly, given it was supporting the development of the nation's future wealth - vast oil and gas reserves off the north-west coast.

Finance Minister Mathias Cormann has advocated freezing GST shares at their current level.

This would give WA about $470 million extra in 2015-16 at the expense of Victoria, Queensland, South Australia and Tasmania.

NSW and the ACT would also benefit by freezing the GST's relativities.

Treasurer Joe Hockey, speaking in New York, confirmed a freeze was one option being considered and again urged Premier Colin Barnett to lay out a reform agenda.

"Western Australia in particular needs to unshackle its own economy by getting rid of some of the old paradigms, restrictions on retail trading hours, owning poles and wires," he said.

"We've got to keep up with the rest of the world to maintain our quality of living."

'The GST can't and shouldn't be touched without consent of all States and Territories.'"Prime Minister *Tony Abbott *



