From The Australian:
Western Australia is facing an unprecedented $3.1 billion budget deficit this year as Treasurer Mike Nahan warns that the one-time boom state is suffering the biggest revenue shock of any Australian government since the Great Depression.
…Yet despite the worsening fiscal crisis, Mr Barnett yesterday ruled out following NSW by privatising WA’s electricity network to reduce debt, a move that would inject up to $10bn into government coffers.
Dr Nahan said the fiscal impact on WA was greater than the Rudd government’s revenue collapse during the global financial crisis in 2009.
“That is the biggest revenue shock a government — state or federal — has experienced in Australia since the Great Depression of the 1930s,” he said.
“Any government would have run a deficit given this shock.”
Very likely, yes, but given the shock follows the largest mining boom in 150 years, and probably all-time for WA, an 85 year shock does not seem all that large, frankly. The issue is not so much today’s deficit, it is the huge pile of debt accumulated through the boom that is the problem. Not enough was saved and that is, in part, because of Dr Nahan.
As for the mooted surplus in 2.5 years, that is a farce. The Budget depression is the leading edge of a recession so deep that it may well end up wearing the same label.
WA’s public debt has only just begun its mountainous climb.
