Western Australia (WA), long recognised for its mineral wealth and strong export sector, has once again set itself apart from the national fiscal landscape by maintaining a surplus in its latest state budget. As other regions across the country grapple with mounting deficits and growing debt burdens, WA has delivered a balanced financial strategy that continues to attract national attention.
This year’s budget outlines a robust financial position built on disciplined spending, a continued commodities boom, and prudent economic forecasting. With surpluses forecast for multiple consecutive years, WA has managed to insulate itself from the economic turbulence seen elsewhere, further reinforcing its reputation for sound financial management.
Key Budget Highlights
1. Sustained Budget Surplus
The 2025-26 financial plan reveals a forecast surplus exceeding $2.5 billion, marking the fifth straight year of positive balances. This consistent trend stands in stark contrast to most other Australian states, many of which are still navigating the fiscal aftermath of the COVID-19 pandemic, infrastructure cost overruns, and sluggish revenue growth.
2. Strategic Revenue Sources
The backbone of WA’s fiscal strength remains its resource sector. High global demand for iron ore, lithium, and natural gas has ensured strong royalty collections, with iron ore alone contributing billions to state revenue. The Treasury has applied cautious commodity price assumptions to avoid overreliance on short-term gains, ensuring sustainability in case of future volatility.
3. Responsible Spending and Investment
Despite its strong position, the government has resisted pressure to dramatically ramp up expenditure. Instead, it has prioritised targeted investments in healthcare, housing, regional development, and education, while maintaining a strong emphasis on debt control. Initiatives such as additional funding for mental health services, Indigenous infrastructure programs, and TAFE expansion reflect a balance between economic prudence and social responsibility.
4. Debt Management
Unlike many jurisdictions experiencing an upward trajectory in net debt, WA’s public debt is not only stable but set to decline relative to the size of its economy. Net debt as a share of Gross State Product (GSP) is projected to fall below 10% over the next four years—well below the national average.
Economic Outlook and Employment
WA’s economy is forecast to grow by 3.1% in the next fiscal year, driven by continued strength in resource exports, an uptick in construction, and growing international investment interest in the state’s clean energy and rare earth sectors. Unemployment is expected to remain low, with job creation supported by major infrastructure projects and private sector growth.
Wages are also on an upward trajectory, aided by a tight labour market and government efforts to address workforce shortages, particularly in regional and remote areas.
Infrastructure and Future Growth
Significant allocations have been made to long-term infrastructure projects designed to boost productivity and liveability. These include:
- Expansion of public transport networks around Perth
- Investments in renewable energy projects, including hydrogen hubs
- Upgrades to regional roads and ports to support freight and logistics
These projects not only support short-term economic activity but are also intended to future-proof the state’s economy against global shifts in energy and technology.
Political and Public Reception
The WA government’s budget strategy has received praise from business groups and economic analysts for its cautious optimism and fiscal discipline. However, some advocacy groups have called for a larger share of the surplus to be directed towards housing affordability and climate resilience, areas where demand continues to grow.
Opposition leaders have argued that while the economic fundamentals are sound, more could be done to ensure the benefits of the boom reach lower-income households and underfunded services.
National Implications
Western Australia’s performance poses an interesting case study for other state governments, highlighting the benefits of a diversified economy backed by natural resources, conservative budgeting, and long-term investment planning. With the federal government facing pressures to rebalance its own books, WA’s financial stewardship could inform broader policy discussions in Canberra.
Conclusion
Western Australia’s latest budget reaffirms its position as a standout performer in Australia’s fiscal landscape. Through a combination of natural resource strength, conservative financial planning, and selective investment, the state continues to buck national trends and demonstrate how disciplined governance can lead to sustained economic health.
While challenges remain—from housing shortages to climate risks—WA’s economic resilience offers a blueprint for balancing prosperity with preparation. As global uncertainties persist, Western Australia appears well-positioned to navigate the future with confidence.
