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State of the states: Western Australia

Due to its small population, WA has only 15 federal electorates, or 11% of the total. Twodogz photography

STATE OF THE STATES: a snapshot of the key issues affecting each state and territory in the lead up to Saturday’s election.

During Tony Abbott’s recent campaign visit to Western Australia, the state’s premier Colin Barnett asked the federal Coalition leader if he would kick in A$100 million to assist with the completion of a new high-tech sports stadium if elected. The premier argued the funding request was not unreasonable, citing support from Canberra for similar projects in other states.

Although Abbott was said to be “supportive”, the likely future PM offered no firm undertaking. Abbott’s reluctance to commit federal funds, while not unreasonable under the circumstances, is indicative of a historical dynamic that exists between WA and its counterparts in Canberra.

In fact, features of the WA-Canberra relationship are often thrown into sharp relief during federal elections. It is reflected in the comparatively modest financial investment by both major parties to woo WA voters. It is underlined by the minimal time that prime ministerial aspirants spend campaigning in the state. And it is also reflected, thankfully, in the amount spent on paid election advertising in WA.

So what are the forces in play which shape the tenor of WA’s relationship with whichever federal party is elected on September 7?

The tyranny of distance

The first factor which affects WA is its remoteness from the eastern seaboard. The state’s capital, Perth, is about 3,095 kilometres from Canberra, which is only slightly greater than the distance that separates WA from Jakarta (3,008km). WA’s isolation from its national counterparts is amplified by the size of its land mass. At over 2.5 million square kilometres, WA takes in 33% of the continent.

In practical terms, the time it takes to travel to Perth, even by plane, makes regular visits to the state a tricky proposition for the leaders of the major parties when every day of the campaign ground war counts.

Premier Colin Barnett and the Commonwealth have fallen out over a range of issues. AAP Image/Tim Clarke

But the tyranny of distance also impacts other dimensions of WA’s relationship to Canberra. Over the years, there have been a number of drag-down, knock-out fights between the premier and the Commonwealth over a range of issues, such as detention centres in WA’s north, the mining tax, health, and education.

While it is easy to dismiss these more recent disagreements as a function of the different partisan complexion of their respective governments, it is also underpinned by a complex history. WA premiers, from both sides of the political divide, have occasionally raged against an anti-WA bias even when federal parliament is controlled by its partisan allies.

So few voters, so few seats

The second reason WA sometimes slips off the federal radar is that it returns only a small contingent of MPs to the national lower house. Due to its small population, WA has only 15 federal electorates, or 11% of the total. To help put this figure into perspective, the area of western Sydney alone has ten federal seats.

The small number of federal seats cannot, on its own, explain everything. In tight election contests, every seat matters. Yet there are few electoral imperatives for either party to direct more time and money into their WA campaigns.

Federal Labor has struggled in WA ever since the 1980s. It holds only three seats and one of these, Brand, may well fall to the Liberals at this election. In contrast, support for the Liberals in WA has remained fairly buoyant. It seems increasingly likely that it will hold Hasluck. The Liberals may even prevail over the Nationals in the division of O’Connor.

Snapshot of Western Australia

The lucky state

The third thing which has had a significant effect on WA, certainly in recent times, is its growing economic clout - derived from its resource wealth. WA is blessed with raw energy reserves; there are vast iron ore deposits in the ground and petroleum in its territorial waters.

As a result of sustained China-led demand for resources, WA had the strongest and fastest-growing economy in the federation in 2011/2012. Annual growth of gross state product (GSP) in WA was 6.7%, against an Australian average of 3.1%. WA’s contribution to overseas exports accounts for around 46% of the national total. Its residents enjoy the highest median weekly incomes in the nation: $1,644.80 compared to the median average of $1,420.90 and the lowest rate of unemployment.

While WA is certainly the lucky state, the national fixation with its success has tended to obscure the challenges that it confronts.

Challenges ahead for WA

While demand for WA resources remain fundamentally robust, there are concerns that this situation can change. As recently as August, the WA government was forced to revise economic growth to 2.5% in 2014/15 from an estimated 3.25% in 2013/14 and 5.75% in 2012/13.

But there are other potential threats looming. Petroleum company Woodside has announced it is considering using floating LNG platforms, a proposal which - if implemented – would cost the state both jobs and revenue.

Quite apart from uncertainties surrounding the future prospects of resource markets, the mining boom has generated various knock-on effects. It has caused WA’s population to swell quickly. Australian Bureau of Statistics data (2011) shows that WA is the fastest-growing state in population terms. In the 12 months between 2011 and 2012, the population grew by 3.5%, compared to national growth of 1.8%. More than 1,000 people pour into WA every month.

The surge in WA’s population has placed enormous strain on the state’s infrastructure, causing increased demand on essential services, such as public education and hospitals.

The most rapid population expansion has occurred in mining-based regional areas. Image from

The state is particularly sensitive to this problem because although the majority of WA’s 2.4 million population (78%) reside in Greater Perth, the most rapid population expansion has occurred in mining-based regional areas. This has necessitated increased spending in parts of the state that are much more costly to service due to their location.

Increases in the state’s population have caused housing prices to rise higher in WA than elsewhere. Preliminary estimates by the ABS indicate that the price index for established houses in the 12 months between 2012-2013 was 5.1%, whereas this was 11% in WA. A survey conducted by Demographia on international housing affordability showed that housing prices in resource-based markets, such as WA’s Pilbara region, are among some of the most unaffordable in the nation despite an abundant supply of land.

The costs associated with the provision of new infrastructure and upgrading public services is a burden met from the state’s budget.

While WA generated a not-so-inconsequential A$5.8 billion in mining royalties in 2013/14, the lion’s share of the state’s budget remains reliant on transfers from the Commonwealth: 31% of the total.

But the state’s receipt of certain types of Commonwealth transfers, namely GST revenue, has been compromised by WA’s economic success. The GST makes up one third of Commonwealth transfers, and is prized by the states because unlike most other categories of transfers, it comes without spending fetters attached.

Yet, over the years, WA access to the GST pool has been in decline. In 2013, the Commonwealth Grants Commission, the statutory body responsible for calculating GST relativities, announced that WA will receive less than 45 cents in every dollar it generated from GST. The commission justified this on grounds of the strength of sustained growth in mining royalties.

The combination of falling GST revenue, underlying volatility in the resource market, and increased stress on the state budget arising from the demands of its burgeoning population is beginning to impact on WA’s financial position. State treasurer Troy Buswell recently announced that WA net debt is forecast to increase from A$18.4 billion in 2013 to A$28.4 billion by 2017.

There are many challenges ahead for the golden state.

This is the third article in our State of the states series. Stay tuned for the other instalments in the lead up to Saturday’s election.

Part one: Tasmania

Part two: Northern Territory

Part four: Victoria

Part five: South Australia

Part six: Australian Capital Territory

Part seven: Queensland

Part eight: New South Wales

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