Western Australia has recorded its eighth consecutive operating budget surplus, with Treasurer Rita Saffioti’s 2026-27 State Budget confirming a $3.5 billion surplus for 2025-26 alongside a further $2.4 billion projected for the coming financial year. The result reinforces WA’s position as the country’s most fiscally resilient state, even as rising net debt and growing expense pressures point to a more complicated financial picture beneath the surplus headline.
The budget, handed down against a backdrop of heightened global uncertainty linked to Middle East conflict and volatile commodity markets, confirmed the state’s domestic economy grew by an estimated 3.5 per cent in 2025-26, driven primarily by strong private demand, with employment reaching record levels across the state.
Where the Money Is Coming From
Royalties from WA’s resources sector remain the backbone of the state’s budget position, with Treasury expecting around $10 billion in royalty and North West Shelf Grant payments in 2026-27 alone. Over the past eight consecutive years of surpluses, total royalty and grant payments to the state have reached an estimated $88 billion, a figure the Chamber of Minerals and Energy of WA has pointed to as clear evidence of the resources sector’s outsized contribution to the state’s financial strength relative to other Australian jurisdictions.
Higher tax, dividend and royalty revenue collectively drove the general government sector to a $2.6 billion operating surplus for the nine months to March 2026, broadly consistent with the prior year, even as Commonwealth funding contributions declined over the same period, partially offsetting the gains from stronger state-based revenue streams.
Where the Money Is Going
The budget confirmed a record $44.3 billion infrastructure investment pipeline over the next four years, including $13.2 billion in infrastructure spending during 2026-27 alone, covering priorities such as new hospitals, transmission infrastructure to support renewable energy connections, and land release programs aimed at unlocking new housing supply. Health received a particularly large boost, with an additional $9.1 billion allocated toward new hospitals, additional beds and expanded medical and nursing staffing across the public health system.
More than $1 billion in direct cost-of-living support for WA households was also included in the budget, alongside a $4.7 billion investment aimed at unlocking land for new housing and supporting first home buyers into the property market, addressing two of the most politically sensitive pressure points facing the state government heading into future election cycles.
The Debt Question
Despite the string of surpluses, net debt is projected to climb past the politically significant $40 billion threshold in 2026-27, reaching an estimated $44.6 billion by 2028-29 as expense growth continues to outpace revenue growth in percentage terms. As part of efforts to manage that trajectory, the government has confirmed voluntary redundancies for 1,500 public servants, a move seen by some analysts as a response to reported growth in public sector headcount in recent years, and by others as a routine budget discipline measure rather than a sign of fiscal distress.
Even with rising debt, WA’s net debt as a share of Gross State Product remains the lowest of any state or territory in the country, a metric the government has repeatedly emphasised when defending its overall fiscal management against opposition criticism.
What It Means Going Forward
Economists caution that WA’s budget position, while genuinely strong relative to other states, remains significantly exposed to commodity price cycles that are ultimately outside the state government’s direct control. A sustained downturn in iron ore or other key export prices could quickly narrow the surplus the government has come to rely on to fund its infrastructure and cost-of-living commitments. For now, though, the eighth consecutive surplus gives Western Australia considerably more fiscal room to move than most other Australian jurisdictions, a position the government is using to fund an ambitious, multi-billion-dollar infrastructure and housing agenda over the years ahead.
How WA Compares to Other States
Western Australia’s run of consecutive surpluses stands in sharp contrast to the fiscal position of several other Australian states, some of which have recorded operating deficits in recent years as they grapple with their own infrastructure and health spending pressures without the benefit of WA’s substantial resources royalty base. That contrast has periodically reignited debate over the GST distribution formula between states, with WA’s comparatively strong royalty revenue continuing to be a point of negotiation in federal-state financial relations.
Credit rating agencies have continued to affirm WA’s strong credit position on the back of its low relative debt levels and consistent surplus track record, a rating that helps keep the state’s borrowing costs lower than they would otherwise be, an advantage that flows through to the affordability of funding the government’s large infrastructure pipeline over coming years.
Opposition figures have argued that a budget this large should be doing more to address cost-of-living pressures directly rather than channelling the bulk of new spending into long-term infrastructure projects, a critique the government has rejected by pointing to the more than $1 billion in direct household support already included in the budget alongside the infrastructure program.
