Western Australia has had some glorious years high on the hog of royalties from a mining boom and generous GST treatment. But the boom is over, and a good deal of the revenue it raised has been blown in a spree. And it is bemoaning the fact that Grants Commission judgments of the state's revenue raising capacity lag, as ever, several years behind.

Until recently, this has been greatly to WA's advantages. In the short term, the state GST revenues generally of only about a third per capita of citizens in other Australian states and territories. Having won on the swings, it now wants the rules altered so that it can also win on the roundabouts.

Fairness questions are important. But they must be considered in context. The Commonwealth's tax paper canvasses whether GST ought to be changed to drop exemptions for food, education and a range of other services. Even without changes to the 10 per cent GST rate, and with compensating tax cuts to help lower-income groups who might be disadvantaged, this would considerably increase the pie, traditionally wholly shared among the states. There is also talk of raising the GST rate, although if this were to happen, it seems clear that it could be only after a united call from premiers, who would have to wear all of the political blame involved.

Broadening the GST base would not only create opportunities for income tax cuts, but for dropping a range of uneconomic and silly taxes at state level, such as payroll taxes, stamp duty on land transfers, and an unhealthy and dangerous dependence on revenue from enabling and expanding gambling. There are very good arguments, including equity arguments, for making more use of GST. But the political problems of achieving this are immense, not least when politicians on both sides of the fence are so short-sighted and opportunistic.

Then there's the federal government's federation discussion paper, which canvasses change to federal state responsibilities in areas such as health and education. Smaller government advocates on the economic right argue that the Commonwealth should get out of hospitals and health care, and pre-school, primary and secondary education, leaving all of the decision making to the states and territories. At other times, politicians on both the left and right (including Abbott himself) have talked of Commonwealth takeovers, at least in health. Given Commonwealth desires for national standards in many of these areas, simple surrenders of responsibilities, or complete takeovers, may be unlikely, particularly in the short term. Yet the issue is on the table in a way it has not been for years. Also a part of the argument is whether states could or should be allowed to levy their own income taxes.

Also looming over the premiers was not only the impending budget, but also the last one. Joe Hockey's first effort may, because of the Senate, have been a political disaster for Abbott and himself, but Abbott has made some virtue by claiming that what's left has set the scene for significant cuts to the growth of Commonwealth expenditure. He has been rather more coy about how this will be done by future significant reductions (about $80 billion worth) to the rate of growth of payments to the states. These reductions (none have yet occurred) have not needed parliamentary approval, and so can be said to be still in place. In place, they would significantly compromise any vestigial prospects of having in place a Gonski-style scheme of funding schools according to need.

Premiers are braced for more such pretend cuts next month. Indeed, the more loudly Abbott and Hockey assure the lobbies that the budget will be boring, with no surprises, and nothing unpleasant for families, and superannuants, the more likely it is that any pretence of fiscal discipline, or "moving in the right direction" (towards deficit reduction) will be at the expense of functions organised through the states. Alas, that means reduced infrastructure, and further cuts in education and health care, and in Indigenous affairs. By comparison, the short term $2 billion hit for WA from the GST divvy-up may seem small bikkies. Political and fiscal responsibility involves dealing with these issues together, not one by one.