EDITORIAL: Budget proclaims Fortress WA built of iron ore. Is it enough to stop the wall turning to sand?

Treasurer Rita Saffioti hit all the key themes the Government is pushing as she spruiked her Budget. Economic powerhouse; infrastructure; strong economic plan; She said WA had “become the envy of the nation for our financial management and economic success”. Harking back to the COVID-busting days of Labor icon Mark McGowan, she said that “Western Australia was once likened to a fortress — Fortress WA”. “While not a worldwide pandemic, the global instability and volatility we now face, means we must once again stand together to repel any economic threat. “This Budget reinforces the walls of Fortress WA. “It ensures we can withstand the global economic chaos, and shields us from becoming collateral damage of geopolitical battles,” Ms Saffioti said. Back inside the fortress the money continues to roll in. The Budget forecasts that over the next four years the Government will bank more than $10 billion in surpluses, of between $2.4 billion and $2.8 billion — including $2.4 billion in the 2025-26 financial year. And therein lies a challenge. The perception that WA is rolling in cash will make people wonder about the Government’s generosity — or lack thereof. WA households will bear the brunt of the State Government’s decision to axe its $400 power bill credit after three years of relief. And the annual cost of owning a vehicle for the average household climbs by 3.3 per cent, to more than $1000. But Ms Saffioti said that rises in household fees and charges had been kept below inflation, and the average household would save about $50 a year, once the single zone public transport cost was factored in — a drop in charges of 0.8 per cent. That means about $1 a week better off over a year. And households which don’t use public transport won’t get those savings. Talk about surpluses also feeds the Eastern States obsession with cutting WA’s GST payments. So Ms Saffioti was quick too to point out that WA will still only receive 75 per cent of our population share of GST this year, and that WA’s net contribution to the other States last financial year was an estimated $39b. The hero in all of this for some years has been WA’s mountains of iron ore and the royalties that has poured into State coffers. However that cash now comes with a caution. Miners of the money-spinning commodity are expected to deliver $8.6b to the State in the 2024-25 financial year, with the royalties budgeted to retreat to $6.6b next financial year and $6b the year after. The decline reflects the end of China’s steel boom, the main customer and driver of WA’s iron ore market for the past two decades. Still casting a long shadow is net debt that is $33b now, climbing to $42b plus in 2028-29. Ms Saffioti acknowledged that WA’s commodities market was still strong, but said the State must keep exploring other opportunities. The State needs that plan to succeed. Or some of Ms Saffioti’s successors may find Fortress WA is actually built of sand.