Western Australia’s Budget Sound But Lessons From East Coast Clear

Written by:
10 May 2024
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“In a state with the good fortune to possess an abundance of mineral resources, it is also fortunate to have solid, long-term management by leaders who acknowledge the value these resources add to the state’s economy,’’ said Daniel Wild, Deputy Executive Director of the Institute of Public Affairs.

Analysis by the IPA of the 2024-25 State Budget handed down by the Western Australian government has found: (tables over page)

  • Net debt per West Australian is forecast to be $9,657 by 2028, which is a 16 per cent increase of $8,304 in 2018.
    • By contrast, net debt per Victorian is forecast to reach almost $25,000 by 2028, which is a seven-fold increase from $3,400 in 2018.
  • By 2028, interest payments on Western Australia’s state debt will be 2.4 per cent of total state government spending, which is consistent with the average from 2013 to 2023.
    • By contrast, by 2028 Victoria’s interest payments will be almost 9 per cent of total spending, almost triple the annual average of 3.6 per cent from 2013 to 2023.

“Western Australia’s budget demonstrates the benefits of pragmatic economic management. However, examples from the east coast, particularly Victoria, are a lesson to avoid repeating in the West, where profligate spending, flawed energy policies and locking up natural resources have cruelled local economies,” said Mr Wild.

Fortunately, IPA analysis shows that since 2014, Western Australia’s government spending and net debt has increased at a much slower rate compared to Victoria, and the state’s economy has grown at a faster rate.

  • In real terms since 2014, the Western Australian state economy has grown by 39 per cent, while state government spending and net debt grew by 15 per cent and 135 per cent respectively.
    • By contrast, since 2014 the Victorian state economy has grown by 29 per cent, while spending and net debt grew by 59 per cent and 417 per cent respectively.

Recent IPA research revealed that Western Australia is the best performing state in the nation, ranking above all states in the categories of wage growth, lowest tax burden, and lowest energy price increases.

“The state budget handed down yesterday shows Western Australia is in a solid fiscal position and remains the economic engine room of the national economy,” said Mr Wild.

“However, it is concerning that the state government is showing signs of following the path of Victoria by shutting down affordable and reliable energy supply, replacing it with unreliable and expensive renewables.”

“For Western Australia to remain prosperous, is it crucial that the state government continues to value and promote its resources sector and avoids repeating the mistakes that have been made in failing states like Victoria,” said Mr Wild.

To download the IPA’s previous research click here.

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