A federal minister has criticised calls to scrap Western Australia's GST deal, labelling it as wrong.
The Productivity Commission on Friday recommended scrapping a 2018 deal that transferred top-up GST payments to WA.
The payments are set to cost the federal budget $60 billion by the end of the decade, with the commission finding the changes made the GST system less equitable for the states.
Resources Minister Madeleine King, who is from WA, said the commission's report did not have credibility.
"I could not live with anything in that Productivity Commission's report. I think it is quite wrong," she told ABC TV on Tuesday.
"Their recent report conflicts with their earlier report, and of course commissions can change their mind. I do accept that, but it is a little bit puzzling the journey they have gone on."
Prominent economist Saul Eslake had previously described the GST deal drawn up by the former Morrison government as the "worst public policy decision of the 21st century thus far".
In its report, the commission called for a return to the GST system pre-2018, but with targeted changes to address issues arising when mining-dominant states increase mineral royalty rates.
But Ms King said WA had been worse off under the previous GST arrangements before the 2018 deal was implemented.
"Western Australia would have been, but for these reforms, outrageously disadvantaged against the rest of the country because of the resources sector that provides for the prosperity of the country," she said.
"When you have a broken consensus on something as important as GST distribution, you have to take action."
Every state and territory bar WA had called for the 2018 deal to be ripped up or strongly changed.
WA Premier Roger Cook hit out at "east coast clowns" following the report's release, vowing to keep the extra GST dollars for the state.
The Productivity Commission will hand down a final report into the GST deal by the end of the year.
Prime Minister Anthony Albanese said he would consider the final report before making any decision on whether to change the GST deal.
