Swelling iron ore royalties and GST payments from the Commonwealth are set to hand the West Australian government a bumper surplus of more than $4 billion for the third straight year.
And the cash bonanza is once again tipped to fund big subsidies for WA electricity users, with households poised to receive an across-the-board rebate of $400 off their bills.
This will be on top of the $350 of energy bill assistance to flow from the federal budget to vulnerable customers.
WA Premier and Treasurer Mark McGowan will hand down his third state budget today — his government's seventh — when it is believed he will unveil a whopping upwards revision to the state's bottom line.
It is understood Mr McGowan will reveal a budget on track to post a surplus of more than $4 billion for the 12 months to the end of June 30, up from a forecast $1.5 billion surplus this time last year.
Last financial year, WA raked in a surplus of $5.7 billion, while in 2020-21 it finished the year almost $6 billion in the black.
On Tuesday, federal Treasurer Jim Chalmers said the Commonwealth was on track to deliver a $4.2 billion for the current financial year – the first in 15 years.
Underpinning WA's latest windfall has been the continued strength of the iron ore price, which the government assumed would only average $US77 a tonne in 2022-23 but has rarely traded below $US90/t.
Every $US1 increase in the value of the iron ore price adds an extra $81 million to the state's coffers over a year, according to budget papers.
In addition, it is understood the government will also bank a bigger-than-expected dividend from the North West Shelf gas plant amid record prices for the fuel internationally.
McGowan eyes GST fight
And in a development that is likely to draw the ire of cash-strapped states elsewhere in the country, the WA government is also set to benefit from an ever-growing stream of GST payments from Canberra.
At the time this year's budget was framed in May last year, the WA government expected to collect about $5.8 billion in GST grants.
However, observers have suggested these receipts may end up being higher thanks to a roaring national economy and rising inflation.
Under a deal struck between Mr McGowan and then treasurer Scott Morrison in 2018, WA gets back a minimum of 70 cents for every $1 of GST it pays the Commonwealth, rising to 75 cents by 2024-25.
However, the deal, which is set to expire in 2026-27, has come under sustained fire from premiers in states including New South Wales and Victoria amid claims it unfairly advantages resource-rich WA.
In anticipation of the fight over GST arrangements, the premier has set aside $1.6 million over three years to pay for analysts to help bolster the state's defence.
Ahead of a review of the deal before it expires, Mr McGowan said: "These looming reviews are a real threat – and WA needs the brightest and the best to help take up our case."
"If the reviews don't go our way, it puts at jeopardy all of our hard work," he said.
"That's why we can't take anything for granted, and we must put our best case forward."
