WA budget: Surplus to make life easier for Albanese

Mark McGowan arrives at Parliament House on Thursday. Picture: AAP

While Mark McGowan’s latest budget will only cause further anger among his fellow premiers and treasurers – both Liberal and Labor – he has done the election chances of federal Labor leader Anthony Albanese no harm.

WA’s status as the only state making inroads into its debt burden will take some of the sting out of Labor’s historical reputation for fiscal mismanagement.

And the $400 electricity credit heading for all WA households ­offers some direct relief from cost-of-living pressures. It is also more generous and fresher in the mind of voters than the $250 handout announced by the federal government in March.

But WA’s rude financial health will become an increasingly severe headache for whoever wins the election, given rival premiers and treasurers in the rest of the country will only increase their calls for an overhaul of the GST system on the back of these figures.

The Coalition has always been perceived as the better economic manager by voters across Australia. The McGowan government, however, has now got the state’s net debt back below $30bn, and is some $14bn lower than it was projected to be by now when Labor came to power in 2017.

The trajectory of WA’s coffers sit in contrast to the federal budget, where debt is climbing ­towards the $1 trillion mark.

Even though the inroads made into WA’s debt have much more to do with the $20bn of iron ore revenues reaped over the past two years than any fiscal wizardry by the government, it does nothing to hurt Labor’s standing in the west.

WA’s latest bumper budget does reinforce the challenge that looms for whoever does win the federal election.

The billions of dollars of ­additional GST revenues being ­directed into WA look increas­ingly unsustainable by the year.

For two years, WA has been collecting almost $1bn a month in iron ore royalties. It’s a unique source of income that only highlights the need for more flexible revenue equalisation measures among the states.

By 2024, when WA would have been receiving just 1c in the dollar under the previous system, it will be receiving 75c in the dollar as well as its mountain of iron ore royalties.

The old system was fatally flawed to the detriment of WA, but each bumper budget surplus out of the west only reinforces the case that the new system has swung too far the other way. No matter what levers they pull, the other states can’t simply legislate their way to having a third of the world’s seaborne iron ore exports pumping out of their backyard.