Federal parliament has passed changes to the GST distribution system.

The overall GST pool for states will see a $9 billion injection of federal money over 10 years, followed by an additional $1 billion in perpetuity once the changes are fully implemented.

The new distribution mechanism is measured against the strongest states - NSW and Victoria - with a floor initially set at 70 cents, ratcheting up to 75 cents in 2024/25.

The changes come after extensive campaigning led by WA, which had been receiving just 30 cents in the dollar.

The Coalition government won Labor’s support by inserting a guarantee no state would be worse off under the changes.

During the transition period from 2021/22 to 2026/27, states and territories will receive payments under either the old or the new system, whichever is higher.

The Productivity Commission will conduct an inquiry at the end of the transition period to assess whether the updated system is working efficiently, effectively and operating as intended.