Who pays for Western Australia

Photo: Nathan Hurst, Unsplash

You have been told, repeatedly and accurately, that you live in the strongest economy in the country. And if you rent, or you are under thirty five, or you have looked lately at what a house costs, you may have noticed that none of this appears to have happened to you. Both of those are true at once. Neither one is spin.

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What we lead the country in

Western Australia had the lowest unemployment rate of any state in April this year, at 4.1 per cent, and the highest workforce participation, at 69.2 per cent. Wages here grew faster last year than in any other state. Full time earnings are the second highest in the country. Median personal income is higher here than in any other state, although both territories are higher still. The Government has now run eight consecutive surpluses, the most recent of them an estimated result rather than an audited one. It holds a triple-A credit rating from both Moody’s and Standard and Poor’s, and it is the only state that holds both. Those figures come from the Bureau of Statistics, from the Government’s own budget papers, and, in the case of the credit rating, from the two agencies that issued it. Not one of them is mine, and not one of them is in dispute.

What we are last in the country in

Now the same state, over the same years. Perth is the least affordable capital city in Australia to rent in. The typical rent takes 32 per cent of a household’s income, against 21 per cent in 2020, on the Rental Affordability Index compiled by SGS Economics. Rents across this state rose 75 per cent between 2019 and 2025, which the Bureau of Statistics records as the steepest rise anywhere in the country.

Shelter WA, the state’s peak housing body, reported in March this year that on average 96 people a day in this state ask homelessness services for help and do not get it. That figure is up 68 per cent in five years, and over the same period the number of West Australians reporting they have slept rough has more than doubled. The count underneath it is the Australian Institute of Health and Welfare’s, for 2024-25. Shelter WA advocates for more housing funding. They are also the ones reading the data.

Then there is a number from the Government’s own budget papers that I have not been able to stop thinking about. The Department of Housing and Works publishes the average wait for people who are eventually housed in social housing. Two years ago it was 156 weeks. This financial year it is expected to be 173. And the target for next year, the number the Government has set and approved and printed, is 185 weeks. Three years and seven months. Not a warning. A target.

And over the past decade, according to the economist Saul Eslake’s analysis of the national accounts, what this state produces per person has not grown at all. Eslake has been a public critic of this state’s fiscal position for years. The Bureau’s own figures for last year put the change at minus 1.1 per cent, the weakest of any state or territory.

Both lists are true, and they are about different people

Between early 2023 and the middle of this year, the median Perth house went from $547,000 to $938,000. Those are the Real Estate Institute’s medians. CoreLogic, which measures it differently, had the Perth median above a million dollars by March. On either count, if you owned a house you gained close to $400,000 for doing nothing at all. Over the same stretch the median rent went from $575 a week to $750. If you rent, you now pay about $9,100 a year more than you did, for the same house.

That is not two economies. It is one economy, and a transfer running through the middle of it.

Where the money went

Wages in this state grew faster than anywhere else in Australia and still lost the race. You do not have to take my word for the losing. Turn to the first table in Budget Paper 3, on page two, and you will find the Government’s forecast for wage growth in this state and its forecast for prices in this city, printed one line above the other. This financial year: wages 3.75 per cent, prices 5.5. Next year: wages 3.25, prices 3.75. Two rows, one table, and the subtraction left to the reader.

There is a footnote under that table worth reading twice. The price forecasts leave electricity out altogether, and Treasury says why: the state’s own successive household electricity credits had distorted the index. Those credits have now ended. The number Treasury forecasts against is not the number that turns up in your letterbox.

What I think happened next is my reading rather than anybody’s finding. Wages lost the race because what they were racing was land. The money that came out of the ground did not stay in wages. It went into the price of houses, and from there to the people who already owned houses, and everyone else pays it as rent. It is the simplest explanation that fits all of the numbers above.

You can see the pressure in the supply. Rentals under $350 a week fell by 82 per cent. In the eighteen months to September 2024, Perth added 694 new rental properties against population growth of 119,000 people.

The households that feel this first are the ones with the least room to move. The community sector organisations that model these budgets each year advocate for more social spending. On their figures for 2024-25, an age pensioner who rents now spends 55 per cent of their income on rent, up from 37 per cent six years earlier. A single parent spends 42 per cent, up from 28. The number of people already in work who came to emergency relief services in this state rose 147 per cent over four years. In work.

And the Economic Regulation Authority counts what households owe their energy retailer. In 2019 the average electricity bill debt in this state was $519. By June last year it was $1,419, having risen 22 per cent in that year alone. Just over forty thousand households are carrying it. Disconnections went the other way. There were 11,776 residential electricity disconnections in 2024-25, down 16 per cent on the year before and a little over half the 21,212 of 2018-19. Fewer households are being cut off. The ones who are not being cut off owe nearly three times what they owed six years ago.

Who the bill went to

So where does the state get its money. In 2019-20 it collected $8.45 billion in mining royalties and $9.06 billion in taxes, out of total revenue of $32.2 billion. In this year’s budget it expects $9.44 billion in royalties and $16.92 billion in taxes, out of $55 billion.

Divide one by the other and you get the shares. Royalties have fallen from 26.3 per cent of what the state collects to 17.2 per cent. Taxation has risen from 28.2 per cent to 30.8. That division is mine, not the Treasury’s. The dollar figures are theirs, and they are in Budget Paper 3, Chapter 4, Table 1. If you think I have the arithmetic wrong, the table is four pages into the chapter and it takes a minute to check. In 2019-20 this state collected about $1.07 in tax for every dollar it collected in royalties. This year it expects $1.79. Every one of the decisions that produced that was announced. The sum of them never was.

The other side of the ledger

The resources industry pays tax, and a great deal of it. Budget Paper 3 puts it more strongly than I would have: this state’s four largest iron ore producers paid more than $117 billion in company tax to the Commonwealth on their Western Australian operations in the six years to 2024-25. That is the Government’s own figure, in the document I am asking you to read. Royalties are no soft touch either. They are charged on the value of what comes out of the ground rather than on profit, which means they are paid in bad years as well as good ones.

The GST is the other one, and anybody who has had that argument with a Victorian knows how it runs. Because of the 2018 reforms, Western Australia receives around $6.6 billion more this year than it would have under the old formula. That figure is the Chamber of Commerce and Industry’s, and it is close to two thirds of our entire allocation. Every other state now gets a payment to make sure it is not worse off as a result. That is not nothing. But the same budget papers say that over the five years to 2029-30 this state will still receive $11.7 billion less than its population share of the GST. Their words for that are “effectively a GST subsidy from Western Australia to other States”. Treasury puts our whole net contribution to the Federation at $36.2 billion for 2024-25 alone. Both of those are true. They are answers to two different questions. And neither of them is the question I am asking here, which is not how much this state receives from Canberra but how it chooses to raise the rest. You can believe we are short-changed by the Federation and still ask who inside Western Australia is carrying the load.

What is not measured

Two things I went looking for and did not find. What is the average household income in this state. The Bureau of Statistics ran the survey that would tell you and then published a statement headed “Survey of Income and Housing results will not be released”. The work was done. The answer was not. And how many West Australian households are behind on their mortgage. There is no current published count by state, from the banking regulator or from anyone else. The Reserve Bank did look closely at Western Australian arrears once, in a box in its Financial Stability Review. That was in 2019.

Some of this is measured, and some of it measured well. The Economic Regulation Authority counts household energy debt to the dollar and puts it on its website. The rest is being done by advocacy organisations with an interest in the answer, by academics working on grants, and by a single indicator on page 582 of an agency’s budget statement. What is not happening is the state that collects the money measuring, systematically and in public, who is carrying it.

None of that is a conspiracy. Surveys get cut, breaking figures down state by state costs money, and nobody’s job depends on keeping a data series alive. But the things we do measure are bad enough, and the things we have stopped measuring are the ones that would tell us just how bad.

It is already in the forward estimates

This next part is not a prediction. The state has already published it. Budget Paper 3 assumes the iron ore price reverts to its long run average of seventy two US dollars a tonne from May 2027. On the Government’s own projections, royalty income falls to $7.4 billion by 2029-30 while tax revenue climbs to $19.4 billion.

Treasury has assumed for seven budgets running that the iron ore price falls back to a long run average. It has never once fallen back. In all seven years the actual price came in above the assumption, and the difference landed on the books as surplus. Treasury also publishes what each dollar is worth: every $US1 a tonne above the assumed price brings in another $94 million. Take the budgeted price at face value anyway.

Run the same division again and the royalty share of what this state collects drops to 13.6 per cent by the end of the decade. Taxation reaches 35.4 per cent. That is $2.61 of tax for every dollar of royalties, against $1.07 ten years earlier. The shift is not something I think might happen. It sits in Treasury’s own numbers, four years out, in a document anyone can download this afternoon.

What a state should be measured by

Two things, and they are different kinds of claim. The first is a matter of principle and no figure will move it. A state should be judged by how its households are doing, not by the size of its balance sheet. A surplus is a means. A credit rating is a means. Neither one is the reason we have a government. And the state is paying for itself less and less out of the minerals, and more and more out of the households. That is a choice government made, even if nobody made it in a single sitting. Somebody should have to stand up in public and argue for it. It should not simply accumulate, year after year, out of forecasting assumptions nobody is ever asked to defend. That argument belongs in the Legislative Council, which is where I sit and where I intend to make it.

The second is only what the figures show. On the state’s own numbers, royalties have fallen from 26.3 per cent of revenue to 17.2, the tax share has risen, and the forward estimates carry both further still. Over the same years Western Australia became the worst place in the country to rent. Whether the first caused the second I do not know. Every piece of this was decided by somebody, and nearly all of it was announced. The sum of it never was, and no government has stood up and defended where the sum leaves us. And nobody whose job it is is measuring who it lands on.

The budget papers are online. The Bureau of Statistics is free. Do not take my word for any of it. Go and check.

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