The latest GST carve-up confirms three things – Queensland is finally sitting at the grown-up’s table, Scott Morrison’s deal to buy off West Australian voters is costing everyone else a bomb, and the current allocation system is falling apart.

Ordinarily, the reports of the Commonwealth Grants Commission (CGC) – created in the mid-1930s by then-prime minister Joe Lyons to placate secessionist-minded West Australians – are as exciting as the ingredient list on a box of Rice Bubbles.

The GST allocation system is now little more than a soggy bowl of cereal.Credit: iStock

But the latest commission report has more snap, crackle and pop than any cereal.

The commission uses a complex system of metrics that would confuse Einstein to determine how best to share the $90 billion of GST among the states and territories. It aims to ensure each gets enough cash to offer their voters a similar quality of goods and services.

The underlying principle is that if you’re a child born in the Tasmanian town of Bicheno, you should have access to roughly the same quality schooling, health services and policing as a child born in the Perth suburb of Gosnells.

In 2000, John Howard updated the system by promising every dollar raised by the new GST would go to the states and territories, allocated through the CGC. Sold as a “growth tax” it was also a zero-sum game, because if one state needed more cash it would have to come from another.

China’s insatiable demand for WA’s iron ore deposits, which pushed the price for a tonne of Pilbara red dirt from less than $20 a tonne to almost $200 a tonne, was the first nail in the CGC process.

Even if the WA government increased royalties on iron ore, most of the extra revenue was sent to the rest of the country.

This redistribution, which is at the heart of the grants commission process, recognises that a government didn’t store billions of tonnes of iron ore within WA’s boundaries, nor was it responsible for China’s rapid industrialisation and suburbanisation.