Western Australia is in the midst of five consecutive years of budget deficits, the state budget shows, as public sector cost cutting fails to offset a plunge in revenues.
Treasurer Mike Nahan handed down his third and final budget before next year's state election on Thursday, revealing the 2016-17 deficit will be almost $1 billion worse than forecast in the mid-year review at $3.9 billion.
It will be WA's third straight year of deficits, which have worsened since the state slipped into the red for the first time in 15 years in 2014-15.
While the Barnett government's public sector belt-tightening program has continued to yield results, it hasn't been enough to counter a sharp drop in revenues amid weaker commodity prices, falling business investment and a record-low GST share.
At the same time, big spending on infrastructure has continued unabated and Dr Nahan says he's unapologetic for that.
"I am very proud of how this government has met the demand created by this population boom," he said in his speech to parliament.
"It has not been easy. We have had to spend a lot of money and quite frankly we have had to borrow a lot of money to do it but I would argue that has been entirely appropriate."
Public sector spending growth was reduced to 2.5 per cent in the year to June 30, up from 2.2 per cent in 2014-15, which is unlikely to appease ratings agencies.
Moody's warned in its last report on WA in February that deficits would rise unless the state government sharply trimmed spending growth, while Standard & Poor's said in October it considered the savings targets challenging.
The opposition's eyes will be on recurrent spending, with opposition treasury spokesman Ben Wyatt saying that was the key to putting WA's budget on the road to recovery, not asset sales.
Dr Nahan, however, is pinning his hopes on asset sales, confirming the planned sale of poles and wires utility Western Power, which the state government won't move on before the March 2017 poll when voters will make it clear whether they like the proposal or not.
