WA debt explained: How bad is it and what are the major parties promising to do about it?
Updated
By at least one measure, WA's debt problem is worse than any other state in the nation and even that of the Commonwealth Government.
With total public sector debt heading past $40 billion, each party faces a challenge to convince voters it will be able to pay for whatever it promises during the election campaign.
But just how bad is it?
What is the debt?
There are two ways to measure that.
One is total public sector debt, which encompasses all activities of government and is the most widely used figure.
WA's total public sector debt is expected to be $33.2 billion by the end of the financial year. But an arguably more accurate way of understanding the state's true financial position is to measure debt for what is termed the "non-financial public sector" (NFPS).
This figure factors in the results of general government agencies, such as the health and education departments, adds in public sector corporations such as energy and water utilities, but leaves out some entities whose figures can distort the true picture (such as Keystart and the Insurance Commission).
WA's NFPS debt is expected to be $36.6 billion by the end of the financial year. Nine years earlier, just before the Barnett Government came to office, that figure was just $4.96 billion.
So what's the problem with the debt?
If every man, woman and child in Western Australia handed over $10,000 to the government today, it still would not clear the state's NFPS debt.
On top of that, the debt means the state also has to pay large interest bills.
WA is set to pay $1.5 billion in interest charges this financial year. That has not been helped by a pair of credit rating downgrades, which affect the interest rate the government has to pay.
How does WA compare?
Badly.
To best compare jurisdictions, debt is often represented as a share of revenue (debt-to-revenue ratio).
By June 30, WA's NFPS debt is expected to be the equivalent of 82.3 per cent of its revenue for the 2016-17 financial year.
The closest state is South Australia, with a NFPS debt-to-revenue ratio of 70.2 per cent.
Tasmania, the state WA Premier Colin Barnett once volunteered to manage to show them how to run an economy, has the nation's lowest NFPS debt-to-revenue ratio at 27.1 per cent.
Even the Commonwealth, which has been described by politicians on both sides as being in a "budget emergency", has a lower NFPS debt-to-revenue ratio than WA with 76.8 per cent.
What has happened to WA's debt over time?
In mid-2008, in the dying days of the Carpenter government, the NFPS debt-to-revenue ratio was 19.04 per cent.
It has risen every year the Barnett Government has been in office, to 69.8 per cent at the end of 2015-16 and the forecast 82.3 per cent this year.
It is expected to keep rising, up to 91.9 per cent in 2018-19, but Treasury then expects it to slowly start falling.
Treasury sets a debt-to-revenue target of 55 per cent, a goal that is not expected to be met anytime soon.
What has the debt paid for?
The Government argues it has borrowed to fund new infrastructure, creating jobs and improving the state.
It can point to new hospitals, roads, Elizabeth Quay and the Perth Stadium as examples of that.
But the Government is also now borrowing to pay for everyday expenses such as public sector wages and maintenance.
Without taking on more debt, the Government can no longer afford to cover all its bills.
As Labor leader Mark McGowan described it, the Government is borrowing to "put petrol in police cars and pay the salaries of teachers".
What do the major parties want to do about it?
The Liberal Party says, if re-elected, it will sell 51 per cent of Western Power to reduce Government debt and fund new infrastructure.
The Nationals back that too, but also want to impose a large tax on the iron ore mined by both BHP Billiton and Rio Tinto.
Labor argues there is no "magic solution", saying it will pay down debt over time. It likens the situation to a family slowly paying off a house.
More broadly, the debt problem is central to nearly every aspect of the WA election campaign.
Topics: elections, business-economics-and-finance, budget, wa
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